Bond Market Update

 Extending Tuesday Losses

• U.S. Treasuries are on track for a lower start with the belly set to show some slight relative weakness in the early going. The market enters the midweek session after a night that saw gains across Asian equity markets with fresh records in Japan's Nikkei (+2.2%) and South Korea's Kospi (+1.9%). Treasury futures, meanwhile, spent the night in a slow retreat while other sovereign debt also faced light pressure. Australia's CPI was a touch hotter than expected in January (3.8%; expected 3.7%), prompting speculation about an additional rate hike from the Reserve Bank of Australia before the end of the year. President Trump delivered the State of the Union address last evening, renewing his call for banning institutional investors from buying single-family homes. The market will not receive any noteworthy economic data today, but the U.S. Treasury will follow yesterday's lukewarm 2-yr note sale with a $70 bln 5-yr note offering at 13:00 ET. Crude oil hovers near the midpoint of this week's range while the U.S. Dollar Index is up 0.1% at 97.90.
• Yield Check:
  • 2-yr: +2 bps to 3.48%
  • 3-yr: +3 bps to 3.49%
  • 5-yr: +2 bps to 3.62%
  • 10-yr: +3 bps to 4.06%
  • 30-yr: +2 bps to 4.71%

• News:
  • China's Ministry of Commerce threated to impose countermeasures on the U.S. after the new global tariff took effect.
  • China's Foreign Ministry has not confirmed President Trump's visit, which is expected at the end of March/start of April.
  • German Chancellor Merz called for deeper economic ties with China during his visit to Beijing.
  • Japan's January Corporate Services Price Index was up 2.6% yr/yr, as expected (last 2.6%). December BoJ Core CPI was up 1.7% yr/yr (expected 1.8%; last 1.9%).
  • Hong Kong's Q4 GDP expanded 1.0% qtr/qtr, as expected (last 0.9%), growing 3.8% yr/yr, as expected (last 3.7%). January CPI was up 0.2% m/m (last 0.3%), rising 1.1% yr/yr (expected 1.2%; last 1.4%).
  • Australia's January CPI was up 3.8% yr/yr (expected 3.7%; last 3.8%) and Q4 Construction Work Done was down 0.1% qtr/qtr (expected 1.2%; last 0.1%).
  • Eurozone's January CPI was down 0.6% m/m (expected -0.5%; last 0.2%) but up 1.7% yr/yr, as expected (last 1.9%). January Core CPI was up 2.2% yr/yr, as expected (last 2.3%).
  • Germany's Q4 GDP expanded 0.3% qtr/qtr, as expected (last 0.0%), growing 0.4% yr/yr, as expected (last 0.3%). March GfK Consumer Climate fell to -24.7 from -24.2 (expected -23.0).
  • France's February Consumer Confidence rose to 91 from 90 (expected 90).
  • Spain's January PPI was down 2.9% yr/yr (last -3.0%).
  • Swiss February ZEW Expectations rose to 9.8 from -4.7.
• Commodities:
  • WTI Crude: +0.7% to $66.10/bbl
  • Gold: +0.5% to $5202.10/ozt
  • Copper: +0.5% to $5.957/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1785
  • GBP/USD: +0.3% to 1.3523
  • USD/CNH: -0.2% to 6.8626
  • USD/JPY: +0.6% to 156.71
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.4%; prior 2.8%)
  • 10:30 ET: Weekly crude oil inventories (prior -9.01 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results