Bond Market Update

Inching Higher Ahead of Jobs Report

• U.S. Treasuries are on track for a higher start, looking to recover some of their losses from Thursday. Treasuries are on course for a higher open even though crude oil is up slightly from yesterday's cash settlement. The market is likely to see some early volatility in reaction to the Employment Situation report for April, which is expected to show continued labor market growth when it crosses the wires at 8:30 ET. The overnight data flow was on the light side, but the market learned about the results of local elections in the U.K., which produced a massive loss for Prime Minister Starmer's party. Crude oil hovers below $95/bbl while the U.S. Dollar Index is down 0.1% at 97.97.
• Yield Check:
  • 2-yr: -1 bp to 3.91%
  • 3-yr: -2 bps to 3.93%
  • 5-yr: -1 bp to 4.03%
  • 10-yr: -2 bps to 4.37%
  • 30-yr: -2 bps to 4.95%

• News:
  • Malaysia's central bank left its policy rate at 2.75%, as expected.
  • Indonesia's central bank warned about a big intervention to support the rupiah.
  • President Trump gave the EU a July 4 deadline to fulfill the trade agreement or face higher tariffs.
  • Local elections in the U.K. resulted in a trouncing for the ruling Labour party and big losses for Conservative opposition while Reform had the best showing. Prime Minister Starmer said today that he will not resign despite the public's sharp turn against his party but calls for his departure are growing louder.
  • Secretary of State Rubio is meeting with Italy's Prime Minister Meloni today.
  • Japan's April Services PMI hit 51.0 (expected 51.2; last 53.4). March Overall Wage Income was up 2.7% yr/yr (expected 3.2%; last 3.4%) and Overtime Pay rose 1.9% yr/yr (last 3.4%).
  • South Korea's March Current Account surplus reached $37.33 bln (last surplus of $23.19 bln).
  • Germany's March trade surplus reached EUR14.3 bln (expected surplus of EUR17.8 bln; last surplus of EUR19.5 bln) as imports grew 5.1% m/m (expected 0.8%; last 4.9%) and exports rose 0.5% m/m (expected -1.7%; last 3.6%). March Industrial Production was down 0.7% m/m (expected 0.4%; last -0.5%), falling 3.0% yr/yr (last -0.3%).
  • Spain's March Industrial Production was up 1.8% yr/yr (last -0.9%).
  • Swiss Q2 SECO Consumer Climate fell to -40 from -30 (expected -46).
• Commodities:
  • WTI Crude: +0.2% to 94.98/bbl
  • Gold: +0.4% to $4728.30/ozt
  • Copper: +1.7% to $6.282/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1766
  • GBP/USD: +0.5% to 1.3612
  • USD/CNH: -0.1% to 6.8002
  • USD/JPY: -0.1% to 156.75
• Data out Today:
  • 8:30 ET: April Nonfarm Payrolls (Briefing.com consensus 67,000; prior 178,000), Nonfarm Private Payrolls (Briefing.com consensus 60,000; prior 186,000), April Unemployment Rate (Briefing.com consensus 4.3%; prior 4.3%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.2%), and Average Workweek (Briefing.com consensus 34.2; prior 34.2)
  • 10:00 ET: March Wholesale Inventories (Briefing.com consensus 1.4%; prior 0.8%) and preliminary May University of Michigan Consumer Sentiment (Briefing.com consensus 50.5; prior 49.8)