Bond Market Update

Lower Start Ahead

• U.S. Treasuries are on track for a lower start after facing some overnight pressure. Treasury futures began slipping in early evening action, followed by a brief bounce attempt at the start of the European session. Overall investor sentiment saw some improvement with equity markets seeing strength while other sovereign debt has been mixed. Economic data released overnight showed unexpected strength in Manufacturing PMI readings in Europe while Services PMI readings weakened. In other news, there is some renewed focus on investment managers after Apollo Global Management (APO) restricted redemptions from one of its funds. Crude oil is back above $90/bbl while the U.S. Dollar Index is up 0.3% at 99.29.
• Yield Check:
  • 2-yr: +5 bps to 3.88%
  • 3-yr: +5 bps to 3.89%
  • 5-yr: +4 bps to 3.99%
  • 10-yr: +4 bps to 4.37%
  • 30-yr: +3 bps to 4.94%

• News:
  • Japan is planning to spend JPY800 bln on gasoline subsidies and may also intervene in the oil market through futures.
  • China's National Development Reform Commission said that fiscal and tax support will be implemented if crude oil prices remain high.
  • Russia tightened its fertilizer exports until April 21.
  • European Central Bank policymaker Vujcic acknowledged that the risk of stagflation has increased.
  • Japan's February National CPI was down 0.2% m/m (last -0.2%) but up 1.3% yr/yr (last 1.5%). February National Core CPI was up 1.6% yr/yr (expected 1.7%; last 2.0%). Flash March Manufacturing PMI hit 51.4 (expected 53.2; last 53.0) and flash Services PMI hit 52.8 (last 53.8).
  • South Korea's February PPI was up 0.6% m/m (last 0.7%), rising 2.4% yr/yr (last 1.9%).
  • Australia's flash March Manufacturing PMI hit 50.1 (last 51.0) and flash Services PMI hit 46.6 (last 52.8).
  • India's flash March Manufacturing PMI hit 53.8 (expected 56.8; last 56.9) and flash Services PMI hit 57.2 (expected 58.3; last 58.1).
  • Eurozone's flash March Manufacturing PMI hit 51.4 (expected 49.4; last 50.8) and flash Services PMI hit 50.1 (expected 51.1; last 51.9).
  • Germany's flash March Manufacturing PMI hit 51.7 (expected 49.6; last 50.9) and flash Services PMI hit 51.2 (expected 52.5; last 53.5).
  • U.K.'s flash March Manufacturing PMI hit 51.4 (expected 50.0; last 51.7) and flash Services PMI hit 51.2 (expected 52.8; last 53.9). March CBI Distributive Trades Survey fell to -52 from -43 (expected -40).
  • France's flash March Manufacturing PMI hit 50.2 (expected 49.4; last 50.1) and flash Services PMI hit 48.3 (expected 49.2; last 49.6).
• Commodities:
  • WTI Crude: +2.8% to $90.55/bbl
  • Gold: +0.4% to $4426.70/ozt
  • Copper: -1.0% to $5.416/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1593
  • GBP/USD: -0.1% to 1.3408
  • USD/CNH: +0.2% to 6.8963
  • USD/JPY: +0.2% to 158.67
• Data out Today: 
  • 8:30 ET: Revised Q4 Productivity (prior 2.8%) and revised Q4 Unit Labor Costs (prior 2.8%)
  • 9:45 ET: Flash March S&P Global U.S. Manufacturing PMI (prior 50.2) and flash March S&P Global U.S. Services PMI (prior 50.4)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results