Bond Market Update

 Reversing Friday Gains

• U.S. Treasuries are on track for a lower start that will reverse the market's gains from Friday. Treasury futures started the week in the red, adding to their losses as the night went on. Other sovereign debt has also faced pressure while upward pressure on energy prices has lifted WTI crude back toward $98/bbl. The advance comes amid reports of a stall in negotiations between the U.S. and Iran with Iran's uranium enrichment limits at the core of the disagreement. Besides the renewed pressure on sentiment, the week got off to a subdued start in global markets. China reported a solid trade surplus for April, but the report also showed a sharp drop in crude oil imports. Economic data during the U.S. session will be limited to the 10:00 ET release of April Existing Home Sales (Briefing.com consensus 4.05 mln; prior 3.98 mln) and the U.S. Treasury will sell $58 bln in 3-yr notes this afternoon. The U.S. Dollar Index is up 0.1% at 97.98.
• Yield Check:
  • 2-yr: +3 bps to 3.92%
  • 3-yr: +3 bps to 3.95%
  • 5-yr: +3 bps to 4.04%
  • 10-yr: +3 bps to 4.39%
  • 30-yr: +2 bps to 4.97%

• News:
  • Preparations are underway for President Trump's visit to Beijing later this week. Treasury Secretary Bessent will visit Japan and South Korea over the next couple days ahead of President Trump's trip to China.
  • South Korea's exports through the first ten days of May were up 43.7% yr/yr with chip exports spiking 149.8%.
  • China's April trade surplus reached $84.80 bln (expected surplus of $83.10 bln; last surplus of $51.13 bln) as imports grew 25.3% yr/yr (expected 15.2%; last 27.8%) and exports rose 14.1% yr/yr (expected 7.9%; last 2.5%). April CPI was up 0.3% m/m (expected -0.1%; last -0.7%), rising 1.2% yr/yr (expected 0.9%; last 1.0%). April PPI was up 2.8% yr/yr (expected 1.7%; last 0.5%).
  • Australia's March Building Approvals fell 10.5% m/m, as expected (last 31.0%), rising 9.0% yr/yr, as expected (last 16.1%). March Private House Approvals were up 0.9% m/m, as expected (last 2.0%).
• Commodities:
  • WTI Crude: +2.6% to $97.90/bbl
  • Gold: -1.0% to $4682.70/ozt
  • Copper: +1.8% to $6.406/lb
• Currencies: 
  • EUR/USD: -0.1% to 1.1769
  • GBP/USD: -0.2% to 1.3606
  • USD/CNH: UNCH at 6.7940
  • USD/JPY: +0.3% to 157.12
• Data out Today:
  • 10:00 ET: April Existing Home Sales (Briefing.com consensus 4.05 mln; prior 3.98 mln)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results