Bond Market Update

Slipping Ahead of 2-yr Note Auction

• U.S. Treasuries are on track for a lower start after spending the night in a narrow range just above lows that were recorded during the Asian session. Overnight volume was reduced due to a holiday in Japan and the overall news flow was light. A former Bank of Japan official said that another rate hike could come as soon as March while Germany's snap election resulted in CDU/CSU receiving nearly 29.0% of the vote, followed by 20.8% for AfD, and 16.4% for Chancellor Scholz's SPD. CDU/CSU will reportedly seek to form a coalition with SPD. The U.S. session will not feature any data but the U.S. Treasury will sell $69 bln in 2-yr notes at 13:00 ET. Crude oil is little changed just above $70/bbl while the U.S. Dollar Index is up 0.1% at 106.69.
• Yield Check:
  • 2-yr: +3 bps to 4.22%
  • 3-yr: +3 bps to 4.23%
  • 5-yr: +3 bps to 4.29%
  • 10-yr: +3 bps to 4.45%
  • 30-yr: UNCH at 4.70%

• News:
  • The Trump administration is reportedly planning to impose large fees on ships owned or built in China.
  • Former Bank of Japan official Shirai said that the Bank of Japan could raise its policy rate to 0.75% in March if the U.S. imposes tariffs.
  • European Central Bank policymaker Wunsch warned that the ECB could "sleepwalk" into too many rate cuts.
  • Singapore's January CPI was down 0.8% m/m (last 0.3%) but up 1.2% yr/yr (expected 2.2%; last 1.5%). January Core CPI was up 0.8% yr/yr (expected 1.5%; last 1.7%).
  • New Zealand's Q4 Retail Sales rose 0.9% qtr/qtr (expected 0.5%; last 0.0%), growing 1.4% qtr/qtr (expected 0.2%; last -0.6%).
  • Eurozone's January CPI was down 0.3% m/m, as expected (last 0.4%) but up 2.5% yr/yr, as expected (last 2.4%). January Core CPI was down 0.9% m/m (expected -1.0%; last 0.5%) but up 2.7% yr/yr, as expected (last 2.7%).
  • Germany's February ifo Business Climate Index remained at 85.2 (expected 85.9). February Current Assessment fell to 85.0 from 86.0 (expected 86.5) and Business Expectations rose to 85.4 from 84.3 (expected 85.2).
• Commodities:
  • WTI Crude: -0.1% to $70.34/bbl
  • Gold: +0.3% to $2961.60/ozt
  • Copper: -0.6% to $4.534/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0463
  • GBP/USD: UNCH at 1.2634
  • USD/CNH: +0.1% to 7.2535
  • USD/JPY: +0.4% to 149.82
• No Data on Today's Schedule
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results