Bond Market Update

 Strong Start in Sight

• U.S. Treasuries are on track for a firmly higher start after the U.S. and Iran largely agreed to a peace deal over the long weekend. The situation was muddled a bit overnight after U.S. forces conducted strikes that were described as defensive, but the market is maintaining a positive tone with WTI crude dipping toward $90/bbl and Treasury futures hovering near their highs from Monday when the cash market was closed. The overnight session saw a limited slate of data and other news while the U.S. session will bring the release of May Consumer Confidence (Briefing.com consensus 92.0; prior 92.8) at 10:00 ET and a $69 bln 2-yr Treasury note auction at 13:00 ET. The U.S. Dollar Index is down 0.1% at 99.10.
• Yield Check:
  • 2-yr: -6 bps to 4.06%
  • 3-yr: -7 bps to 4.10%
  • 5-yr: -9 bps to 4.18%
  • 10-yr: -8 bps to 4.48%
  • 30-yr: -7 bps to 5.00%

• News:
  • Taiwan's equity market overtook India's as the fifth largest in the world, thanks to support from Taiwan Semiconductor Manufacturing.
  • Sri Lanka's central bank raised its policy rate by a 100 basis points to 8.75% due to hot inflation.
  • European Central Bank policymaker Villeroy de Galhau said that second-round effects of inflation have not appeared yet while policymaker Schnabel said that a rate hike should be made in June.
  • Bank of Israel lowered its policy rate by 25 bps to 3.75%, as expected.
  • The U.K. is reportedly looking to join EU's EUR4 bln investment fund for startups.
  • Japan's March BoJ Core CPI was up 2.8% yr/yr (expected 1.7%; last 2.5%). March Leading Index rose to 114.0 from 113.2 (expected 114.5) and Coincident Indicator was up 0.2% m/m (expected 0.3%; last -1.7%).
  • Singapore's April Industrial Production rose 5.8% m/m (expected 1.5%; last 3.5%), jumping 17.6% yr/yr (expected 12.0%; last 9.2%).
  • U.K.'s May CBI Distributive Trades Survey rose to -46 from -68 (expected -52).
  • Spain's April PPI was up 8.3% yr/yr (last 3.4%).
• Commodities:
  • WTI Crude: -4.1% to $92.65/bbl
  • Gold: -0.2% to $4513.30/ozt
  • Copper: UNCH at $6.38/lb
• Currencies:
  • EUR/USD: UNCH at 1.1635
  • GBP/USD: -0.2% to 1.3469 
  • USD/CNH: UNCH at 6.7850
  • USD/JPY: +0.2% to 159.20
• Data out Today:
  • 9:00 ET: March FHFA Housing Price Index (Briefing.com consensus 0.1%; prior 0.0%) and March S&P Case-Shiller Home Price Index (Briefing.com consensus 1.0%; prior 0.9%)
  • 10:00 ET: May Consumer Confidence (Briefing.com consensus 92.0; prior 92.8)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results