Bond Market Update

 Short End Leads Early Selling

• U.S. Treasuries are on track for a lower start that will cut in to the market's gains from the past couple days. Treasury futures opened in positive territory on Sunday evening, before spending the rest of the night in a slow retreat alongside other sovereign debt. Meanwhile, crude oil opened below $100/bbl on Sunday evening but spent the rest of the night in a rise that produced a high just shy of $108/bbl during the past couple hours. Iran-related headlines remained in focus through the weekend. President Trump said that the U.S. will begin guiding some ships through the Strait of Hormuz, but Iran's military warned ships against approaching the Strait. Economic data released overnight featured mostly better-than-expected Manufacturing PMI readings from major economies while the U.S. session will only see the release of March Factory Orders (Briefing.com consensus 0.5%; prior 0.0%) at 10:00 ET. However, the latest Senior Loan Officer Opinion Survey from the New York Fed and Quarterly Refunding Financing Estimates from the Treasury will be released at 14:00 ET and 15:00 ET, respectively. Crude oil trades just below $104/bbl while the U.S. Dollar Index is up 0.2% at 98.38.
• Yield Check:
  • 2-yr: +3 bps to 3.92%
  • 3-yr: +3 bps to 3.94%
  • 5-yr: +3 bps to 4.05%
  • 10-yr: +2 bps to 4.40%
  • 30-yr: +2 bps to 4.99%

• News:
  • A senior Bank of Korea policymaker believes that the central bank should consider a rate hike, according to Yonhap.
  • Japan's Prime Minister Takaichi pledged to increase defense cooperation with Australia.
  • The European Central Bank's survey of professional forecasters raised the 2026 harmonized inflation forecast for the EU to 2.2% from 1.8% while the growth outlook was reduced to 1.0% from 1.2%.
  • European Central Bank policymaker De Guindos said that the war impact has not been fully reflected in economic data, but forward indicators point to a significant impact, while policymaker Rehn said that fast action will be needed if second-round inflation effects appear.
  • South Korea's April Manufacturing PMI hit 53.6 (last 52.6).
  • Singapore's April Manufacturing PMI hit 50.7 (last 50.5).
  • Australia's April MI Inflation Gauge was up 0.6% (last 1.3%) and April ANZ Job Advertisements decreased 0.8% (last -3.2%). March Building Approvals were down 10.5% m/m (expected -10.2%; last 31.0%) but up 9.0% yr/yr (last 16.1%). March Private House Approvals rose 0.9% m/m (last 2.0%).
  • India's April Manufacturing PMI hit 54.7 (expected 55.9; last 53.9).
  • Eurozone's April Manufacturing PMI hit 52.2, as expected (last 51.6). May Sentix Investor Confidence rose to -16.4 from -19.2 (expected -20.9).
  • Germany's April Manufacturing PMI hit 51.4 (expected 51.2; last 52.2).
  • Italy's April Manufacturing PMI hit 52.1 (expected 51.6; last 51.3).
  • France's April Manufacturing PMI hit 52.8, as expected (last 50.0).
  • Spain's April Manufacturing PMI hit 51.7 (expected 49.5; last 48.7).
  • Swiss April Manufacturing PMI hit 54.5 (expected 52.0; last 53.3).
• Commodities:
  • WTI Crude: +2.0% to $103.90/bbl
  • Gold: -1.6% to $4569.60/ozt
  • Copper: -1.5% to $5.894/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1697
  • GBP/USD: -0.2% to 1.3542
  • USD/CNH: UNCH at 6.8272
  • USD/JPY: +0.1% to 157.15
• Data out Today:
  • 10:00 ET: March Factory Orders (Briefing.com consensus 0.5%; prior 0.0%)
  • 14:00 ET: Senior Loan Officer Opinion Survey
  • 15:00 ET: Treasury Quarterly Refunding Financing Estimates