Bond Market Update

Ticking Higher

• U.S. Treasuries are on track for a slightly higher start after yesterday's modest advance. Treasury futures spent early evening action in a sideways range, rising to highs during the early portion of the European session before returning to overnight levels. Other markets have been more mixed with Asian equities finishing lower while European stocks hold gains. Economic data released overnight showed solid April Household Spending in Japan (1.6% m/m; expected 0.8%) while eurozone's Q1 GDP was revised down to -0.2% from +0.1%, reflecting the first contraction since 2021. The U.S. session will feature the release of the Employment Situation report for May at 8:30 ET, which is likely to invite some volatility. Crude oil is little changed near $93/bbl while the U.S. Dollar Index is down 0.2% at 95.20.
• Yield Check:
  • 2-yr: -1 bp to 4.04%
  • 3-yr: UNCH at 4.10%
  • 5-yr: -1 bp to 4.18%
  • 10-yr: -1 bp to 4.47%
  • 30-yr: UNCH at 4.98%

• News:
  • South Korea's President Lee will visit France during the G-7 summit between June 15 and 17.
  • Indonesia will be exempt from some U.S. tariffs, according to its Economic Ministry.
  • The Reserve Bank of India left its policy rate at 5.25%, as expected, and announced that foreign institutional investors will be exempt from capital gains taxes on sales or transfer of government securities.
  • The market remains all but certain that the European Central Bank will announce a 25-basis point rate hike on Thursday with another hike expected later this year.
  • France's transportation minister said that there should be no concerns about jet fuel or gasoline supply levels during the summer.
  • Ukraine's president sent a letter to Russia's leader, proposing a bilateral meeting to end the war.
  • Japan's April Household Spending was up 1.6% m/m (expected 0.8%; last -1.3%) but down -0.5% yr/yr (expected -1.5%; last -2.9%). April Overall Wage Income rose 3.5% yr/yr (expected 3.1%; last 3.1%), and Overtime Pay was up 4.2% yr/yr (expected 3.2%; last 3.1%). April Leading Index rose to 115.9 from 114.0 (expected 114.4) and Coincident Indicator was up 1.1% m/m (expected -1.7%; last 0.3%).
  • South Korea's April Current Account reached surplus $28.29 bln (last surplus of $37.93 bln).
  • Singapore's April Retail Sales were up 0.3% m/m (last 3.4%), rising 5.4% yr/yr (last 4.6%).
  • India's Q4 GDP expanded 7.8% (expected 7.2%; last 7.8%).
  • Eurozone's Q1 GDP contracted 0.2% qtr/qtr (expected 0.1%; last 0.1%) but was up 0.3% yr/yr (expected 0.8%; last 1.2%). Q1 Employment Change was up 0.1% qtr/qtr, as expected (last 0.2%), rising 0.5% yr/yr, as expected (last 0.7%).
  • U.K.'s May Halifax House Price Index was down 0.1% m/m (expected 0.0%; last -0.1%) but up 0.5% yr/yr (expected 1.0%; last 0.4%).
  • France's April Industrial Production was up 0.1% m/m (expected -0.2%; last 1.4%). April trade deficit reached EUR5.6 bln (expected deficit of EUR6.2 bln; last deficit of EUR6.4 bln) and April Current Account deficit reached EUR200 mln (last deficit of EUR900 mln).
  • Italy's April Retail Sales were unchanged m/m (expected 0.4%; last 0.8%), rising 1.6% yr/yr (last 3.8%).
• Commodities:
  • WTI Crude: -0.3% to $92.75/bbl
  • Gold: -0.3% to $4492.00/ozt
  • Copper: -1.6% to $6.434/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1641
  • GBP/USD: +0.4% to 1.3469
  • USD/CNH: -0.1% to 6.7665
  • USD/JPY: -0.1% to 159.84
• Data out Today:
  • 8:30 ET: May Nonfarm Payrolls (Briefing.com consensus 96,000; prior 115,000), Nonfarm Private Payrolls (Briefing.com consensus 89,000; prior 123,000), 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 34.3; prior 34.2)
  • 15:00 ET: April Consumer Credit (Briefing.com consensus $17.5 bln; prior $24.9 bln)