Bond Market Update

Long End Ahead

• U.S. Treasuries are on track for a modestly higher start in longer tenors while the short end is expected to begin little changed. Treasury futures navigated a mostly sideways range through the night, reaching their best levels during the past hour. There was some hope for de-escalation in the trade war with China amid indications that China could implement tariff exemptions on medical equipment and certain industrial chemicals, similar to what was offered during President Trump's first term. The speculation has given a boost to risk assets, putting European equities on track for a firmly higher finish to the week. Crude oil is under pressure while the U.S. Dollar Index is up 0.2% at 99.58.
• Yield Check:
  • 2-yr: UNCH at 3.79%
  • 3-yr: UNCH at 3.79%
  • 5-yr: -1 bp to 3.92%
  • 10-yr: -3 bps to 4.28%
  • 30-yr: -3 bps to 4.74%

• News:
  • People's Bank of China Governor Pan confirmed that the PBoC will maintain moderately loose policy.
  • China's National People's Congress Standing Committee will meet early next week.
  • Japan's Economy Minister Akazawa repeated that an extra budget is not being planned right now.
  • South Korea will hold technical trade talks with U.S. officials on May 15-16.
  • Policy analyst Pieter Cleppe noted the opportunity for the EU to potentially scrap burdensome green regulations as part of trade negotiations amid U.S. pressure on non-tariff barriers
  • Japan's April Tokyo CPI was up 3.5% yr/yr (last 2.9%). April Tokyo Core CPI was up 3.4% yr/yr (expected 3.2%; last 2.4%).
  • Singapore's Q1 URA Property Index rose 0.8% qtr/qtr (expected 0.6%; last 2.3%). March Industrial Production fell 3.6% m/m (expected 0.6%; last -2.9%) but was up 5.8% yr/yr (expected 8.1%; last 0.9%).
  • U.K.'s March Retail Sales grew 0.4% m/m (expected -0.3%; last 0.7%), rising 2.6% yr/yr (expected 1.8%; last 2.2%). March Core Retail Sales were up 0.5% m/m (expected -0.4%; last 0.7%), rising 3.3% yr/yr (expected 2.2%; last 1.8%). April GfK Consumer Confidence fell to -23 from -19 (expected -21).
  • France's April Business Survey improved to 99 from 96 (expected 96).
• Commodities:
  • WTI Crude: -1.5% to $61.86/bbl
  • Gold: -1.4% to $3301.90/ozt
  • Copper: -1.5% to $4.784/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1351
  • GBP/USD: -0.1% to 1.3314
  • USD/CNH: +0.1% to 7.2874
  • USD/JPY: +0.5% to 143.35
• Data out Today:
  • 10:00 ET: Final April University of Michigan Consumer Sentiment (Briefing.com consensus 48.5; prior 50.8)