Bond Market Update

Feeling Calm

• U.S. Treasuries found a bid overnight, comforted by the calming seen in Japan's bond market following the LDP's convincing election victory over the weekend. That comfort has extended to other sovereign bond markets, as lower rates can be seen today around the globe. The U.S. market is waiting on key economic data this morning, namely the January Retail Sales report and Q4 Employment Cost Index at 8:30 a.m. ET, as well as some new supply. Results from the $58 billion 3-yr note auction will be announced at 1:00 p.m. ET.
• Yield Check:
  • 2-yr: -1 bp to 3.47%
  • 3-yr: -1 bp to 3.54%
  • 5-yr: -2 bps to 3.72%
  • 10-yr: -2 bps to 4.18%
  • 30-yr: -3 bps to 4.82%
• News:
  • President Trump and President Xi are expected to meet in China in early April, but a White House official reportedly said that meeting has not yet been finalized.
  • Republicans are preparing a continuing resolution on DHS funding, but passage is not guaranteed. Politico
  • House Democrats will force a vote Wednesday to revoke President Trump's tariffs on Canada, but the vote is largely symbolic because President Trump will veto it. Politico
  • House passes bipartisan bill to reduce regulations and increase housing supply. The Senate will likely make changes to the bill. The Hill
  • The White House wants data center agreements with technology companies so energy prices do not increase for consumers. Politico
  • The Trump administration plans to remove the legal basis for federal greenhouse gas regulation this week. WSJ
  • ECB member Villeroy will be resigning from his post on June 1, 2026, versus the officially scheduled end date of October 2027.
  • UK Prime Minister Starmer has reportedly garnered support to remain in power, although questions remain surrounding his leadership due to the associated fallout from the Epstein scandal.
  • Taiwan's top trade negotiator said it would be impossible to relocate 40% of the island's semiconductor supply chain to the U.S. before the end of President Trump's second term, according to CNBC.
• Commodities:
  • WTI crude: +0.1% to $64.44/bbl
  • Gold: -0.2% to $5068.90/ozt
  • Copper: -0.8% to $5.91/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1901
  • GBP/USD: -0.1% to 1.3676
  • USD/CNH: flat at 6.9126
  • USD/JPY: -0.5% to 155.12
• The Day Ahead:
  • 08:30 ET: Q4 Employment Cost Index (Briefing.com consensus 0.8%; prior 0.8%), December Retail Sales (Briefing.com consensus 0.4%; prior 0.6%), Retail Sales ex-auto (Briefing.com consensus 0.4%; prior 0.5%), and December Import/Export Prices
  • 10:00 ET: November Business Inventories (Briefing.com consensus 0.2%; prior 0.3%)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results