Bond Market Update

Weighed Down By Oil Again

• U.S. Treasuries started the week on a quiet note, giving in to modest selling pressure that kept the market from building on its early strength. Treasuries followed last week's plunge to fresh lows for the year with a subdued Monday session after a weekend when G-7 finance ministers and central bankers gathered in France to discuss the recent volatility in global bond markets. The Treasury complex climbed out of the gate as investor sentiment received a boost from a report that the U.S. might suspend oil sanctions on Iran, but the impact was short-lived. The report invited hopes about progress in negotiations, but the market quickly realized that there has been no meaningful breakthrough. Crude oil climbed toward $108/bbl its highest level in more than two weeks, contributing to modest pressure that left Treasuries with modest losses. The U.S. Dollar Index fell 0.2% to 99.06.
• Yield Check:
  • 2-yr: +1 bp to 4.09%
  • 3-yr: +2 bps to 4.17%
  • 5-yr: +2 bps to 4.28%
  • 10-yr: +3 bps to 4.62%
  • 30-yr: +2 bps to 5.15%

• News:
  • Japan will implement an extra budget, contrary to recent reports.
  • The White House released a summary of agreements made between Presidents Trump and Xi, including an agreement for cooperation on rare earth elements.
  • A South Korean court ruled that actions taken by Samsung's union must not significantly hinder production.
  • Fitch affirmed Germany's AAA rating with a Stable outlook.
  • British Prime Minister Starmer is reportedly planning his exit, though he has not officially announced his resignation yet.
  • China's April Retail Sales were up 0.2% yr/yr (expected 2.0%; last 1.7%). April Industrial Production rose 4.1% yr/yr (expected 6.0%; last 5.7%), increasing 5.6% yr/yr (last 6.1%). April Fixed Asset Investment was down 1.6% yr/yr (expected 1.7%; last 1.7%), April Unemployment Rate fell to 5.2% from 5.4% (expected 5.3%), and April House Prices were down 3.5% yr/yr (last -3.4%).
  • Singapore's April trade surplus reached SGD13.068 bln (last surplus of SGD11.12 bln) as non-oil exports rose 11.0% m/m (last 3.0%), increasing 24.5% yr/yr (last 15.3%).
  • New Zealand's April Performance of Services Index hit 48.9 (last 46.2).
  • Italy's March trade surplus reached EUR4.709 bln (expected surplus of EUR5.25 bln; last surplus of EUR4.983 bln).
  • Swiss Q1 GDP expanded 0.5% qtr/qtr (last 0.1%).
• Today's Data:
  • The NAHB Housing Market Index rose to 37 in May (Briefing.com consensus 34) from 34 in April.
• Commodities:
  • WTI crude: +3.1% to $108.75/bbl
  • Gold: -0.1% to $4558.30/ozt 
  • Copper: +0.2% to $6.31/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1649
  • GBP/USD: +0.8% to 1.3424
  • USD/CNH: -0.2% to 6.7998
  • USD/JPY: +0.1% to 158.89
• The Day Ahead:
  • 10:00 ET: April Pending Home Sales (Briefing.com consensus 1.6%; prior 1.5%)