Bond Market Update

 Short End Ahead

• U.S. Treasuries are on track for a slightly higher start in shorter tenors after a quiet night in the futures market. Treasury futures faced some pressure in early evening trade, but not before seeing some gains after yesterday's cash close. The late-afternoon gains followed President Trump's comments about his decision to pause the next round of strikes on Iran due to a request from other Gulf nations. This has been seen as a small positive, though President Trump has reserved the right to resume the military campaign at any time. Treasury futures spent the night in a steady slide from their afternoon highs, though the belly remains slightly positive at this time while crude oil remains near $108/bbl. The U.S. Dollar Index is little changed near 99.23.
• Yield Check:
  • 2-yr: -2 bps to 4.07%
  • 3-yr: -2 bps to 4.15%
  • 5-yr: -2 bps to 4.26%
  • 10-yr: -1 bp to 4.61%
  • 30-yr: UNCH at 5.15%

• News:
  • The U.S. Treasury extended a temporary sanction waiver on Russian seaborne oil.
  • The EU's Economic Commissioner Dombrovskis said that G-7 has made progress on critical minerals. 
  • Bank of England policymaker Breeden spoke about the potential benefits of tokenization. The EU is looking at ways to counter food inflation.
  • Japan's Q1 GDP expanded 0.5% qtr/qtr (expected 0.4%; prior 0.2%), growing 2.1% yr/yr (expected 1.7%; last 0.8%). Q1 GDP Price Index was up 3.4% yr/yr (expected 3.1%; prior 3.4%), GDP External Demand increased 0.3% qtr/qtr (expected 0.2%; prior 0.0%), GDP Capital Expenditure rose 0.3% qtr/qtr (expected 0.2% prior 1.4%), GDP Private Consumption rose 0.3% qtr/qtr (expected 0.2%; prior 0.0%). March Industrial Production was down 0.4% m/m (expected -0.5%; prior -2.0%) and Capacity Utilization fell 1.2% m/m (prior -0.1%). March Tertiary Industry Activity Index rose to 16.5 from -1.1 (expected -0.4).
  • Hong Kong's April Unemployment Rate remained at 3.7%.
  • Australia's May Westpac Consumer Sentiment was up 3.5% (prior -12.5%).
  • New Zealand's Q1 Input PPI was up 1.4% (expected 0.8%; prior -0.5%) and Output PPI was up 0.8% qtr/qtr (expected 0.5%; last 0.1%). April Electronic Card Retail Sales fell 1.3% m/m (prior 0.7%) but were up 2.0% yr/yr (last 2.7%).
  • Eurozone's March trade surplus reached EUR7.8 bln (expected EUR5.4 bln; prior EUR11.1 bln).
  • U.K.'s March three-month employment increased by 148,000 (expected 107,000; prior 25,000), March Unemployment Rate rose to 5.0% from 4.9% (expected 4.9%), March Average Earnings Index + Bonus rose 4.1% (expected 3.8%; prior 3.9%), and April Claimant Count increased by 26,500 (expected 23,100; prior 4,900). Q4 Labor Productivity was down 0.5% (prior -0.5%).
• Commodities:
  • WTI Crude: -0.4% to $108.27/bbl
  • Gold: -0.3% to $4545.20/ozt
  • Copper: -1.4% to $6.228/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1620
  • GBP/USD: -0.2% to 1.3407
  • USD/CNH: +0.2% to 6.8093
  • USD/JPY: +0.2% to 159.10
• Data out Today:
  • 10:00 ET: April Pending Home Sales (Briefing.com consensus 1.6%; prior 1.5%)