Bond Market Update

Short End Behind After Monday Rally

• U.S. Treasuries are on track for a modestly lower start in shorter tenors while the long end is expected to show slight relative strength in the early going. Treasury futures followed Monday's strong rally with some early evening weakness, followed by a sideways drift through the rest of the night. Similarly, there was limited movement in other sovereign debt, thanks in part to a subdued data/news slate. China's Shanghai Composite (+0.9%) had an upbeat reopening after the Lunar New Year closure while South Korea's Kospi (+2.1%) cruised to another new record. Domestically, a new global tariff went into effect today, but at 10% instead of 15%, and FedEx (FDX) filed a federal lawsuit, seeking to recover all IEEPA tariffs that the company paid in recent months, serving as a reminder that tariff-related headlines will likely continue appearing for the time being. The market will receive the February Consumer Confidence (Briefing.com consensus 86.0; prior 84.5) report at 10:00 ET and the U.S. Treasury will sell $69 bln in 2-yr notes this afternoon. Crude oil hovers near $66.50/bbl while the U.S. Dollar Index is up 0.2% at 97.91.
• Yield Check:
  • 2-yr: +1 bp to 3.45%
  • 3-yr: +1 bp to 3.46%
  • 5-yr: +1 bp to 3.59%
  • 10-yr: UNCH at 4.03%
  • 30-yr: -1 bp to 4.69%

• News:
  • The People's Bank of China made no changes to its one-year (3.00%) and five-year (3.50%) loan prime rates, which was expected.
  • Japan's Prime Minister Takaichi reportedly expressed reservations about additional rate hikes during a meeting with Bank of Japan Governor Ueda.
  • China's Ministry of Commerce banned dual-use exports to nearly two dozen Japanese companies, citing national security concerns.
  • German Chancellor Merz will visit China over the next two days.
  • South Korea's February Consumer Confidence rose to 112.1 from 110.8. January PPI was up 0.6% m/m (last 0.4%), rising 1.9% yr/yr (last 1.9%).
  • U.K.'s February CBI Distributive Trades Survey fell to -43 from -17 (expected -27).
  • France's February Business Survey fell to 102 from 105 (expected 104).
• Commodities:
  • WTI Crude: +0.3% to $66.51/bbl
  • Gold: -1.0% to $5172.60/ozt
  • Copper: +1.6% to $5.871/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1780
  • GBP/USD: UNCH at 1.3489
  • USD/CNH: -0.1% to 6.8788
  • USD/JPY: +0.8% to 155.84
• Data out Today:
  • 9:00 ET: December FHFA Housing Price Index (Briefing.com consensus 0.4%; prior 0.6%) and December S&P Case-Shiller Home Price Index (Briefing.com consensus 1.4%; prior 1.4%)
  • 10:00 ET: February Consumer Confidence (Briefing.com consensus 86.0; prior 84.5) and December Wholesale Inventories (Briefing.com consensus 0.2%; prior 0.2%)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results