Bond Market Update

Long End Paces Early Selling

• U.S. Treasuries are on track for a lower start in longer tenors while the 2-yr note is set to begin closer to its unchanged level. Treasury futures slumped last evening, once it became clear that Japan Prime Minister Takaichi's election gamble paid off, with her party winning supermajority before factoring in the seats that were won by LDP's coalition partner Ishin. The prime minister is poised to implement her agenda with little opposition and Finance Minister Katayama said that the programs will be funded without additional bond issuance. Treasury futures spent the rest of the night in a slow rise that erased the bulk of last night's losses. Politics remained in focus going into the European session with Spain seeing a rightward shift and growing speculation that British Prime Minister Starmer's days may be numbered. The overnight economic data flow was on the light side with things set to remain quiet on that front during the U.S. session. Crude oil holds a modest gain while the U.S. Dollar Index is down 0.4% at 97.23.
• Yield Check:
  • 2-yr: +1 bp to 3.51%
  • 3-yr: +1 bp to 3.58%
  • 5-yr: +2 bps to 3.78%
  • 10-yr: +3 bps to 4.24%
  • 30-yr: +3 bps to 4.86%

• News:
  • Thailand's election produced a three-way deadlock that was largely expected.
  • China has resumed some rare earth exports to Japan.
  • Australia placed a 10% tariff on steel imports from China.
  • Speculation is on the rise that British Prime Minister Starmer could be ousted after his unimpressive visit to China and growing focus on his knowledge of Lord Mandelson's ties to Jeffrey Epstein.
  • A weekend election in Spain resulted in a rightward shift with Prime Minister Sanchez's Socialist party seeing its support fall to 24.5% from 29.5%.
  • In Portugal, Socialist Jose Seguro was elected president.
  • Japan's December Overall Wage Income 2.4% yr/yr (expected 3.0%; last 1.7%). December Current Account surplus JPY2.70 trln (expected surplus of JPY2.95 trln; last surplus of JPY3.14 trln). January Bank Lending 4.5% yr/yr, as expected (last 4.3%) and January Economy Watchers Current Index 47.8 (expected 49.1; last 47.7)
  • Eurozone's February Sentix Investor Confidence rose to 4.2 from -1.8 (expected -0.2).
  • Swiss Q1 SECO Consumer Climate rose to -30 from -37, as expected.
• Commodities:
  • WTI Crude: +0.3% to $63.70/bbl
  • Gold: +1.2% to $5037.20/ozt
  • Copper: +0.1% to $5.89/lb
• Currencies:
  • EUR/USD: +0.5% to 1.1877
  • GBP/USD: +0.3% to 1.3651
  • USD/CNH: -0.1% to 6.9204
  • USD/JPY: -0.5% to 156.44
• No Data on Today's Schedule