Bond Market Update

Long End Ahead

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market. Treasury futures climbed at the start of the overnight session, giving back some of their modest gains as the night went on. Overnight volume was reduced once again due to holiday closures in China and Japan, but both markets will reopen tomorrow. The weekend went by without military action against Iran, but there were ongoing reports highlighting the potential for limited strikes. Friday's tariff ruling from the Supreme Court remained in the conversation, injecting some added uncertainty surrounding trade. Today's economic data will be limited to the 10:00 ET release of December Factory Orders (Briefing.com consensus 0.9%; prior 2.7%). Crude holds a slim gain while the U.S. Dollar Index is flat at 97.81.
• Yield Check:
  • 2-yr: UNCH at 3.48%
  • 3-yr: UNCH at 3.50%
  • 5-yr: -1 bp to 3.64%
  • 10-yr: -2 bps to 4.07%
  • 30-yr: -1 bp to 4.72%

• News:
  • Former Bank of Japan policymaker Sakurai said that a March rate hike is possible if the yen faces renewed weakness.
  • U.S. Trade Representative Greer said that the effective tariff on imports from China has decreased to 40% from 45% after Friday's opinion from the Supreme Court.
  • South Korea's exports through the first 20 days of February were up 23.5% yr/yr with chip exports jumping 16.4%.
  • Germany's auto association noted that Friday's tariff ruling in the U.S. does not apply to main tariffs affecting the auto industry.
  • German Chancellor Merz was reelected as CDU leader by a wide margin.
  • New Zealand's Q4 Retail Sales were up 0.9% qtr/qtr (expected 0.6%; last 1.9%) and Core Retail Sales were up 1.5% qtr/qtr (expected 0.4%; last 1.2%). January Credit Card Spending rose 1.0% yr/yr (last -0.2%).
  • Singapore's January CPI was down 0.5% m/m (last 0.3%) but up 1.4% yr/yr (last 1.2%). January Core CPI was up 1.0% yr/yr (last 1.2%).
  • Germany's February ifo Business Climate Index rose to 88.6 from 87.6 (expected 88.4). February Current Assessment rose to 86.7 from 85.7 (expected 86.1) and Business Expectations rose to 90.5 from 89.6, as expected.
  • Italy's January CPI was up 0.4% m/m, as expected (last 0.2%), rising 1.0% yr/yr, as expected (last 1.2%).
  • Swiss January PPI was down 0.2% m/m (expected 0.1%; last -0.2%), falling 2.2% yr/yr (last -1.8%).
• Commodities:
  • WTI Crude: +0.3% to $66.65/bbl
  • Gold: +2.0% to $5184.50/ozt
  • Copper: -0.5% to $5.808/lb
• Currencies:
  • EUR/USD: UNCH at 1.1777
  • GBP/USD: UNCH at 1.3480
  • USD/CNH: -0.1% to 6.8880
  • USD/JPY: UNCH at 154.94
• Data out Today:
  • 10:00 ET: December Factory Orders (Briefing.com consensus 0.9%; prior 2.7%)