Bond Market Update

Lower Start Ahead

• U.S. Treasuries are on track for a lower start with relative weakness in shorter tenors keeping their yields near levels not seen since the summer while longer tenors outperform slightly, staying above this year's lows. Treasury futures climbed shortly after yesterday's cash close, but the rest of the night saw a steady retreat that produced lows during the past two hours. Other sovereign debt has also faced pressure as the market remains concerned with the ongoing volatility in the price of oil and persistent geopolitical uncertainty heading into the weekend. Investors received only a handful of economic reports since yesterday's close while the U.S. session will be free of economic data. Crude oil holds a modest gain just north of $96/bbl while the U.S. Dollar Index is up 0.2% at 99.39.
• Yield Check:
  • 2-yr: +3 bps to 3.86%
  • 3-yr: +2 bps to 3.85%
  • 5-yr: +1 bp to 3.93%
  • 10-yr: +2 bps to 4.30%
  • 30-yr: +2 bps to 4.87%

• News:
  • The People's Bank of China made no changes to its one-year (3.00%) and five-year (3.50%) loan prime rates.
  • China Securities Journal reported that the Chinese government may reform the consumption tax to increase local income.
  • Fitch affirmed New Zealand's AA+ rating but revised the outlook to Negative from Stable.
  • Expectations for a June rate hike from the European Central Bank are solidifying with the market speculating that a hike could come as soon as April.
  • Spain will reduce its taxes on fuel.
  • China's February FDI was down 5.7% YTD (last -5.7%).
  • Hong Kong's February CPI was up 0.5% m/m (last 0.2%), rising 1.7% yr/yr (expected 1.6%; last 1.1%).
  • Singapore's Q4 Unemployment Rate remained at 2.0%, as expected.
  • New Zealand's February trade deficit reached NZD257 mln (expected deficit of NZD740 mln; last deficit of NZD627 mln). February Credit Card Spending was down 1.1% yr/yr (last 0.9%).
  • Eurozone's January trade deficit reached EUR1.9 bln (expected surplus of EUR12.8 bln; last surplus of EUR11.2 bln). Current Account surplus reached EUR37.9 bln (expected surplus of EUR17.2 bln; last surplus of EUR14.6 bln).
  • Germany's February PPI was down 0.5% m/m (expected 0.3%; last -0.6%), falling 3.3% yr/yr (expected -2.7%; last -3.0%).
  • U.K.'s February Public Sector Net Borrowing reached GBP14.30 bln (expected GBP8.70 bln; last -GBP31.9 bln). March CBI Industrial Trends Orders rose to -27 from -28 (expected -30).
  • Italy's January trade surplus reached EUR1.089 bln (expected surplus of EUR5.65 bln; last surplus of EUR5.993 bln).
• Commodities:
  • WTI Crude: -1.0% to $95.15/bbl
  • Gold: +1.2% to $4661.20/ozt
  • Copper: -0.2% to $5.458/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1569
  • GBP/USD: -0.3% to 1.3394
  • USD/CNH: +0.2% to 6.8908
  • USD/JPY: +0.6% to 158.62
• No Data on Today's Schedule