Bond Market Update

Steady Start in Sight

• U.S. Treasuries are on track for a largely flat start with the long end expected to show some slight relative weakness after outperforming yesterday. Treasury futures rallied to highs at the start of the overnight session, but the early gains faded as the night went on, leaving the market little changed this morning. Overnight action featured more records in Japan's Nikkei (+0.3%) and South Korea's Kospi (+3.7%) while movement in sovereign debt has been subdued. JGBs faced some pressure in shorter tenors while the long end outperformed amid falling rate hike expectations for April after Prime Minister Takaichi nominated two dovish policymakers to the Bank of Japan. Today's economic data will be limited to the 8:30 ET release of weekly Initial Claims (Briefing.com consensus 211,000; prior 206,000) and Continuing Claims (prior 1.869 mln). Later in the day, the U.S. Treasury will sell $44 bln in 7-yr notes. Crude oil is slipping below $65/bbl while the U.S. Dollar Index is flat at 97.70.
• Yield Check:
  • 2-yr: UNCH at 3.47%
  • 3-yr: -1 bp to 3.48%
  • 5-yr: UNCH at 3.62%
  • 10-yr: UNCH at 4.05%
  • 30-yr: +1 bp to 4.70%

• News:
  • The Bank of Korea left its policy rate at 2.50%, as expected. Governor Rhee said that South Korea's inclusion in the MSCI Developed Market Index could boost inflows of foreign capital.
  • The U.K. is preparing to announce a critical minerals deal with Kazakhstan.
  • Iceland will hold a referendum on resuming EU accession talks.
  • Japan's December Leading Index rose to 111.0 from 109.9 (expected 110.2) and Coincident Indicator was down 0.6% m/m (expected -0.4%; last -1.0%).
  • Singapore's Q4 GDP expanded 2.1% qtr/qtr (expected 1.9%; last 2.6%). January Industrial Production was up 5.3% m/m (expected 4.5%; last -0.3%), rising 16.6% yr/yr (expected 11.0%; last 10.9%).
  • Australia's Q4 Building Capital Expenditure increased by 2.3% (last 2.3%) and Private New Capital Expenditure was up 0.4% qtr/qtr (expected -0.1%; last 6.4%).
  • New Zealand's February ANZ Business Confidence fell to 59.2 from 64.1.
  • Eurozone's February Business and Consumer Survey fell to 98.3 from 99.3 (expected 99.8). January Private Sector Loans rose 3.0% yr/yr (expected 3.1%; last 3.0%) and January loans to nonfinancials rose 2.8% yr/yr (expected 3.1%; last 3.0%).
  • Italy's February Consumer Confidence rose to 97.4 from 96.8 (expected 97.2) and Business Confidence fell to 88.5 from 89.2.
  • Swiss Q4 Employment Level increased to 5.544 mln from 5.532 mln.
• Commodities:
  • WTI Crude: -1.8% to $64.22/bbl
  • Gold: -0.5% to $5199.60/ozt
  • Copper: -0.3% to $5.969/lb
• Currencies:
  • EUR/USD: UNCH at 1.1805
  • GBP/USD: -0.1% to 1.3540
  • USD/CNH: -0.2% to 6.8366
  • USD/JPY: -0.1% to 156.13
• Data out Today: 
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 211,000; prior 206,000) and Continuing Claims (prior 1.869 mln)
  • 12:00 ET: Weekly natural gas inventories (prior -144 bcf)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results