Bond Market Update

Short End Lags Ahead of February CPI

• U.S. Treasuries are on track for a lower start ahead of the 8:30 ET release of CPI (Briefing.com consensus 0.3%; prior 0.5%) and Core CPI (Briefing.com consensus 0.3%; prior 0.4%) for February with shorter tenors leading the early selling. Treasury futures inched higher through the first half of the night, reaching their best levels shortly after the start of the European session, followed by a return to levels from early evening trade. The market received only a small slate of economic data, leaving the focus on tariffs. The 25% tariffs on imports of steel and aluminum went into effect today and the European Commission announced the launch of countermeasures to U.S. import tariffs, including the potential implementation of duties on up to EUR26 bln worth of imports from the States. Crude oil is fighting to climb off its lowest level of the year while the U.S. Dollar Index is up 0.3% at 103.58.
• Yield Check:
  • 2-yr: +3 bps to 3.97%
  • 3-yr: +4 bps to 3.98%
  • 5-yr: +2 bps to 4.06%
  • 10-yr: +1 bp to 4.30%
  • 30-yr: +1 bp to 4.61%

• News:
  • The U.S. ruled out an exemption from tariffs for Australian steel and aluminum, but Australia is not seeking to impose retaliatory tariffs at this time
  • Toyota will grant its employees their full wage hike demand, making for the fourth year in a row that the company matched demands.
  • Portugal is headed for an early election after the country's government lost a confidence vote.
  • Japan's February PPI was unchanged m/m (expected -0.1%; last 0.3%), rising 4.0% yr/yr, as expected (last 4.2%). Q1 BSI Large Manufacturing Conditions fell to -2.4 from 6.3 (expected 6.5).
  • South Korea's February Unemployment Rate fell to 2.7% from 2.9%.
  • India's February CPI was up 3.61% yr/yr (expected 4.00%; last 4.31%). January Industrial Production rose 5.0% yr/yr (expected 3.5%; last 3.2%) and Manufacturing Output rose 5.5% m/m (last 3.0%).
  • New Zealand's February Electronic Card Retail Sales rose 0.3% m/m (last -1.6%) but were down 4.2% yr/yr (last -0.5%).
  • Spain's January Retail Sales grew 2.2% yr/yr (last 4.0%).
• Commodities:
  • WTI Crude: +1.0% to $66.91/bbl
  • Gold: UNCH at $2921.50/ozt
  • Copper: +2.3% to $4.874/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0900
  • GBP/USD: UNCH at 1.2941
  • USD/CNH: +0.3% to 7.2446
  • USD/JPY: +0.7% to 148.74
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 11.2%; prior 20.4%)
  • 8:30 ET: February CPI (Briefing.com consensus 0.3%; prior 0.5%) and Core CPI (Briefing.com consensus 0.3%; prior 0.4%)
  • 10:30 ET: Weekly crude oil inventories (prior -2.33 mln)
  • 14:00 ET: February Treasury Budget (prior -$129.0 bln)
• Treasury Auctions:
  • 13:00 ET: $39 bln 10-yr Treasury note reopening results