Bond Market Update

An Eye on PPI and FOMC

• U.S. Treasuries are sitting tight, waiting to take some added direction from this morning's PPI data and the FOMC decision at 2:00 p.m. ET. The latter will be accompanied by an updated Summary of Economic Projections (SEP) and followed by Fed Chair Powell's press conference at 2:30 p.m. ET. The Fed news will precede policy announcements from the Bank of Japan tonight and the Bank of England, ECB, and Swiss National Bank on Thursday. The Fed is expected to leave its target policy rate unchanged at 3.50-3.75%, yet previews suggest the SEP could show an uptick for the Fed's inflation forecast and a lingering call for just one rate cut this year and next. Some easing in oil prices provided some overnight support for sovereign bond markets.
• Yield Check:
  • 2-yr: +1 bp to 3.68%
  • 3-yr: unch at 3.68%
  • 5-yr: -1 bp to 3.78%
  • 10-yr: -1 bp to 4.19%
  • 30-yr: -2 bps to 4.83%

• News:
  • Gulf states want the U.S. to cripple or dismantle the Iranian regime before the war ends. WSJ
  • Three members of the FOMC could dissent at today's Fed meeting. WSJ
  • Japanese Prime Minister Sanae Takaichi will meet with President Trump tomorrow to discuss Iran. FT
  • Iranian attacks on Gulf states continue. President Trump told reporters the Iran war could end "in the near future." Bloomberg
  • The Trump administration plans to ease sanctions on Venezuela's oil sector. Bloomberg
  • Iraq has resumed Kirkuk crude exports via Ceyhan. Reuters
  • FOMC decision later today (2:00 p.m. ET) and policy announcements from the Bank of England, ECB, and Swiss National Bank on Thursday
  • Banks will soon sell $18 billion in debt related to EA (EA) deal. FT
  • South Korea said it will be implementing capital market reforms to strengthen market fundamentals
  • Eurozone February CPI 0.6% m/m (expected 0.7%; prior -0.6%) and 1.9% yr/yr (expected 1.9%; prior 1.7%); core CPI 0.8% m/m (expected 0.8%; prior -1.1%) and 2.4% yr/yr (expected 2.4%; prior 2.2%)
  • Japan's February exports 4.2% yr/yr (expected 1.6%; prior 16.8%) and imports 10.2% yr/yr (expected 11.5%; prior -2.6%)
• Commodities:
  • WTI Crude: -1.6% to $94.64/bbl
  • Gold: -0.8% to $4970.00/ozt
  • Copper: -0.7% to $5.72/lb
• Currencies:
  • EUR/USD: flat at 1.1535
  • GBP/USD: flat at 1.3350
  • USD/CNH: flat at 6.8787
  • USD/JPY: flat at 159.06
• The Day Ahead:
  • 07:00 ET: MBA Mortgage Applications Index (actual -10.9%; prior 3.2%)
  • 08:30 ET: February PPI (Briefing.com consensus: 0.3%; prior 0.5%) and core PPI (Briefing.com consensus: 0.4%; prior 0.8%)
  • 10:00 ET: January Factory Orders (prior -0.7%)
  • 10:30 ET: EIA Crude Oil Inventories (prior +3.82M)
  • 14:00 ET: FOMC Decision
  • 14:30 ET: Fed Chair Powell press conference
  • 16:00 ET: January Net Long-Term TIC Flows (prior $28.0B)