Bond Market Update

Monday Gains Padded

• U.S. Treasuries climbed for the second day in a row with the 10-yr note leading the way after overcoming some light early pressure. The trading day started with modest losses in most tenors after a night that featured some more gains in global equity markets. Treasuries ranged near their staring levels through the initial hour of action before embarking on a slow, but steady, daylong rise that was paced by the 10-yr note while shorter tenors underperformed. The market avoided getting whipped around by headlines today, though Bloomberg reported that there has been little progress in trade negotiations between the United States and the European Union and that the EU expects most tariffs to remain in place. Investors did not receive any top-tier data, but they received solid quarterly results from Bank of America (BAC) and Citigroup (C). Today's advance sent the 10-yr yield back below its 50-day moving average (4.332%) with the benchmark yield now down 27 basis points from Friday's peak. Tomorrow's session will bring 20-yr bond reopening and a full slate of data, including March Retail Sales (Briefing.com consensus 1.3%; prior 0.2%) and March Industrial Production (Briefing.com consensus -0.3%; prior 0.7%). Crude oil recorded a modest loss while the U.S. Dollar Index rose 0.6% to 100.24, extending its bounce off levels last seen in April 2022.
• Yield Check:
  • 2-yr: UNCH at 3.83%
  • 3-yr: -2 bps to 3.84%
  • 5-yr: -4 bps to 3.96%
  • 10-yr: -4 bps to 4.32%
  • 30-yr: -2 bps to 4.78%

• News:
  • Japanese press reported that a meeting of G7 finance ministers and central bankers is being organized for April 23 ahead of an official meeting that is scheduled for late May. 
  • Treasury Secretary Bessent said last evening that Treasury buybacks could be increased.
  • The latest ECB bank lending survey showed a slight tightening in credit access for businesses in the first quarter due to heightened economic risks.
  • There was ongoing speculation that the People's Bank of China will step in to support markets in some way.
  • UBS lowered its forecast for China's 2025 GDP to 3.4% from 4.0%.
  • The Reserve Bank of Australia released its March Minutes, showing an agreement that it was premature to cut at that meeting, but the likelihood of a cut in May is now on the rise.
  • South Korea's February M2 Money Supply rose 5.6% (last 5.7%).
  • India's March WPI Inflation was up 2.05% yr/yr (expected 2.50%; last 2.38%) and March CPI was up 3.34% yr/yr (expected 3.60%; last 3.61%). March trade deficit reached $21.54 bln (last deficit of $14.05 bln).
  • New Zealand's March FPI was up 0.5% m/m (last -0.5%).
  • Eurozone's February Industrial Production rose 1.1% m/m (expected 0.1%; last 0.6%), growing 1.2% yr/yr (expected -0.8%; last -0.5%). April ZEW Economic Sentiment fell to -18.5 from 39.8 (expected 13.2).
  • Germany's March WPI was down 0.2% m/m (expected 0.2%; last 0.6%) but up 1.3% yr/yr (last 1.6%). April ZEW Economic Sentiment fell to -14.0 from 51.6 (expected 10.6) and ZEW Current Conditions ticked up to -81.2 from -87.6 (expected -86.0).
  • U.K.'s February Average Earnings Index + Bonus was up 5.6% yr/yr (expected 5.7%; last 5.6%). February three-month employment increased by 206,000 (last 144,000), and February Unemployment Rate remained at 4.4%, as expected. March Claimant Count increased by 18,700 (expected 30,300; last 16,500).
  • France's final March CPI was up 0.2% m/m, as expected (last 0.0%), rising 0.8% yr/yr, as expected (last 0.8%).
• Today's Data:
  • The Empire State Manufacturing survey rose to -8.1 (Briefing.com consensus -14.8) in April from -20.0 in March.
  • Export prices were unchanged in March after increasing a revised 0.5% (from 0.1%) in February. Excluding agriculture, export prices were down 0.1% after increasing a revised 0.5% (from 0.1%) in February. Import prices were down 0.1% in March after increasing a revised 0.2% (from 0.4%) in February. Excluding oil, import prices were up 0.1% after increasing a revised 0.1% (from 0.3%) in February.
• Commodities:
  • WTI crude: -0.4% to $61.33/bbl
  • Gold: +0.4% to $3241.60/ozt
  • Copper: -0.4% to $4.62/lb
• Currencies:
  • EUR/USD: -0.7% to 1.1275
  • GBP/USD: +0.3% to 1.3216
  • USD/CNH: +0.3% to 7.3292
  • USD/JPY: +0.2% to 143.18
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 20.0%)
  • 8:30 ET: March Retail Sales (Briefing.com consensus 1.3%; prior 0.2%), Retail Sales ex-auto (Briefing.com consensus 0.2%; prior 0.3%)
  • 9:15 ET: March Industrial Production (Briefing.com consensus -0.3%; prior 0.7%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 78.2%)
  • 10:00 ET: February Business Inventories (Briefing.com consensus 0.3%; prior 0.3%) and April NAHB Housing Market Index (Briefing.com consensus 39; prior 39)
  • 10:30 ET: Weekly crude oil inventories (prior +2.55 mln)
  • 16:00 ET: February Net Long-Term TIC Flows (prior -$45.2 bln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results