Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a slightly higher start in longer tenors while the short end is expected to begin closer to the unchanged level. Treasury futures navigated inside a narrow, mostly sideways, range through the night that saw a big batch of economic releases ahead of tomorrow's Labor Day closures in many markets. April PMI readings from China showed a deceleration in activity in both sectors with the official Manufacturing PMI (49.0) dipping into contractionary territory and reaching its lowest level since December 2023. Elsewhere, eurozone's Q1 GDP (0.4% qtr/qtr; expected 0.2%) beat expectations while the advance reading of Q1 GDP for the U.S. (Briefing.com consensus 0.4%; prior 2.4%) will be released at 8:30 ET. Crude oil is seeing an extension of its recent weakness while the U.S. Dollar Index is up 0.2% at 99.45.
• Yield Check:
  • 2-yr: -1 bp to 3.65%
  • 3-yr: -1 bp to 3.64%
  • 5-yr: -2 bps to 3.76%
  • 10-yr: -2 bps to 4.15%
  • 30-yr: -3 bps to 4.62%

• News:
  • Ukraine is reportedly ready to sign a natural resources deals with the United States as early as today.
  • Australia's Treasurer Chalmers said that he expects more rate cuts after today's release of CPI for Q1.
  • China's April Manufacturing PMI hit 49.0 (expected 49.8; last 50.5). April Non-Manufacturing PMI hit 50.4 (expected 50.7; last 50.8). April Caixin Manufacturing PMI hit 50.4 (expected 49.9; last 51.2).
  • Japan's March Industrial Production (prelim) was down 1.1% m/m (expected -0.5%; last +2.3%). March Retail Sales rose 3.1% yr/yr (expected +3.6%; last +1.3%). March Large Retailers' Sales were down 1.2% m/m (last +0.4%) but up 3.0% yr/yr (last +2.0%).
  • South Korea's March Industrial Production rose 2.9% m/m (expected +0.2%; last +1.4%), growing 5.3% yr/yr (expected +3.3%; last +7.1%). March Retail Sales were down 0.3% m/m (last +1.9%). March Service Sector Output was down 0.3% m/m (last +0.5%).
  • Singapore's March Bank Lending reached SGD846.5B (last SGD 841.1B).
  • Australia's Q1 CPI was up 0.9% q/q (expected +0.8%; last +0.2%), rising 2.4% yr/yr (expected +2.3%; last +2.4%). March Private Sector Credit was up 0.5% m/m, as expected (last +0.5%) and March Housing Credit was also up 0.5% m/m (last +0.4%).
  • New Zealand's April ANZ Business Confidence hit 49.3 (last 57.5). April NBNZ Own Activity slowed to 47.7% from 48.6%.
  • Eurozone's flash Q1 GDP expanded 0.4% qtr/qtr (expected 0.2%; last 0.2%), growing 1.2% yr/yr (expected 1.0%; last 1.2%).
  • Germany's March Import Prices were down 1.0% m/m (exp -0.7%; last +0.3%) but up 2.1% yr/yr (last +3.6%). March Retail Sales were down 0.2% m/m (exp -0.4%; last +0.2%) but up 2.2% yr/yr (last 0.0%). Q1 GDP expanded 0.2% q/q (exp +0.2%; last -0.2%) but was down 0.2% yr/yr (exp -0.2%; last -0.2%). April Unemployment increased by 4K (exp +16K; last +26K). April Unemployment Rate remained at 6.3%, as expected.
  • U.K.'s April Nationwide HPI was down 0.6% m/m (exp -0.1%; last 0.0%) but up 3.4% yr/yr (exp +4.1%; last +3.9%).
  • France's March Consumer Spending was down 1.0% m/m (exp 0.0%; last -0.2%). Q1 GDP was up 0.1% q/q (exp +0.1%; last -0.1%), rising 0.8% yr/yr (exp +0.7%; last +0.8%). April CPI was up 0.5% m/m (exp +0.4%; last +0.2%), rising 0.8% yr/yr (exp +0.8%; last +0.8%).
  • Italy's Q1 GDP expanded 0.3% q/q (exp +0.2%; last +0.2%), growing 0.6% yr/yr (last +0.5%). April CPI was up 0.2% m/m, as expected (last 0.3%), rising 2.0% yr/yr, as expected (last 1.9%). March PPI was down 2.4% m/m (last 0.7%) but up 3.9% yr/yr (last 6.2%).
  • Swiss April KOF Leading Indicators hit 97.1 (exp 101.8; last 103.2). April ZEW Expectations hit -51.6 (last -10.7).
• Commodities: 
  • WTI Crude: -0.8% to $59.94/bbl
  • Gold: -1.3% to $3289.20/ozt
  • Copper: -4.7% to $4.643/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1375
  • GBP/USD: -0.4% to 1.3360
  • USD/CNH: +0.1% to 7.2685
  • USD/JPY: +0.5% to 142.98
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -4.2%; prior -12.7%)
  • 8:15 ET: April ADP Employment Change (Briefing.com consensus 128,000; prior 77,000)
  • 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 0.9%; prior 0.9%), advance Q1 GDP (Briefing.com consensus 0.4%; prior 2.4%), and advance Q1 GDP Deflator (Briefing.com consensus 3.1%; prior 2.3%)
  • 9:45 ET: April Chicago PMI (Briefing.com consensus 46.0; prior 47.6)
  • 10:00 ET: March Pending Home Sales (Briefing.com consensus -0.2%; prior 2.0%), March Personal Income (Briefing.com consensus 0.4%; prior 0.8%), Personal Spending (Briefing.com consensus 0.4%; prior 0.4%), PCE Prices (Briefing.com consensus 0.0%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.1%; prior 0.4%)
  • 10:30 ET: Weekly crude oil inventories (prior +244,000)