Bond Market Update

Longer Tenors Lead

• U.S. Treasuries are on track for a modestly higher start after a night of some caution in global sovereign debt ahead of today's 16:00 ET tariff announcement from President Trump. Treasury futures spent the Asian session in a sideways range, rising to highs once the focus shifted to action in Europe. The market remains uncertain about the exact structure of tariffs, so it would not be surprising to see persistent apprehension during today's session. Overnight action saw reduced 2025 growth forecasts from major business lobbies in Germany and Italy. In the U.S., the market will receive the ADP Employment Change (Briefing.com consensus 120,000; prior 77,000) report for March ahead of Friday's release of the Employment Situation report (Briefing.com consensus 130,000) from the Bureau of Labor Statistics. Crude oil trades in the red while the U.S. Dollar Index is down 0.2% at 104.08.
• Yield Check:
  • 2-yr: UNCH at 3.86%
  • 3-yr: -1 bp to 3.84%
  • 5-yr: -1 bp to 3.90%
  • 10-yr: -2 bps to 4.14%
  • 30-yr: -2 bps to 4.50%

• News:
  • Bank of Japan Governor Ueda warned that tariffs could have a significant impact on global trade and economic growth.
  • South Korea's acting President Han called for calm ahead of Friday's court decision about impeaching former President Yoon.
  • Germany's banking association lowered its domestic growth forecast for 2025 to 0.2% from 0.7%.
  • Italy's business lobby lowered its domestic forecast to 0.6% from 0.9% with a worst-case scenario projecting growth of just 0.2%.
  • Greece plans to increase its military spending by EUR25 bln over the next 12 years.
  • Japan's March Monetary Base was down 3.2% yr/yr (expected -1.5%; prior -1.9%).
  • South Korea's March CPI was up 0.2% m/m, as expected (last 0.3%), rising 2.1% yr/yr (expected 2.0%; prior 2.0%).
  • India's March Manufacturing PMI hit 58.1 (expected 57.6; last 56.3).
  • Australia's March AIG Construction Index fell to -19.3 from -3.7 and AIG Manufacturing Index fell to -29.7 from -8.2. February Building Approvals were down 0.3% m/m (expected -1.4%; last 6.9%) but up 9.1% yr/yr (last 9.4%). February Private House Approvals rose 1.0% m/m (last 1.4%).
  • New Zealand's February Building Consents rose 0.7% m/m (last 2.6%).
  • France's February government budget deficit reached EUR40.3 bln (expected deficit of EUR30.2 bln; last deficit of EUR17.3 bln).
  • Spain's March Unemployment decreased by 13,300 (expected -2,500; last -6,000).
• Commodities:
  • WTI Crude: -0.3% to $71.00/bbl
  • Gold: +0.4% to $3157.00/ozt
  • Copper: +0.7% to $5.071/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0804
  • GBP/USD: +0.2% to 1.2949
  • USD/CNH: UNCH at 7.2761
  • USD/JPY: -0.3% to 149.20
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.6%; prior -2.0%)
  • 8:15 ET: March ADP Employment Change (Briefing.com consensus 120,000; prior 77,000)
  • 10:00 ET: February Factory Orders (Briefing.com consensus 0.4%; prior 1.7%)
  • 10:30 ET: Weekly crude oil inventories (prior -3.34 mln)