Bond Market Update

 Treasuries Bid as Oil Slide Deepens

• U.S. Treasuries are on track for an early continuation of their bounce from the past two days with the belly expected to show slight relative strength in the early going. Treasury futures navigated a sideways range through the first half of the night, rallying to highs as the focus shifted from Asia to Europe. Other sovereign debt has also advanced while crude oil is falling back below its 50-day moving average (93.83) toward yesterday's low (88.66). Economic data released overnight included a strong March Factory Orders report from Germany (5.0%; expected 1.0%) and there was also a surprise 25-basis point rate hike from Norway's central bank aimed at countering inflation. The U.S. session will see the release of some inflation-related data with preliminary Q1 Productivity (Briefing.com consensus 1.8%; prior 1.8%) and preliminary Q1 Unit Labor Costs (Briefing.com consensus 2.7%; prior 4.4%) set to be reported at 8:30 ET. The U.S. Dollar Index is down 0.1% at 97.91.
• Yield Check:
  • 2-yr: -2 bps to 3.85%
  • 3-yr: -2 bps to 3.87%
  • 5-yr: -3 bps to 3.97%
  • 10-yr: -3 bps to 4.33%
  • 30-yr: -2 bps to 4.92%

• News:
  • Top Japanese officials, including Prime Minister Takaichi, are expected to speak with Treasury Secretary Bessent next week.
  • Indonesia is setting up a plan to stabilize its bond market.
  • Norges Bank unexpectedly increased its policy rate to 4.25% from 4.00% due to inflation.
  • Riksbank left its policy rate at 1.75% but indicated readiness to act.
  • Today's local elections in the U.K. are expected to be a setback for the Labour government, which has been steadily losing support since taking power in mid-2024.
  • Airbus received an order for 150 aircraft from AirAsia.
  • Japan's April Monetary Base was down 11.3% yr/yr (expected -10.5%; last -11.6%).
  • Australia's March trade deficit reached AUD1.84 bln (expected surplus of AUD4.38 bln; last surplus of AUD5.026 bln) as imports grew 14.1% m/m (last -2.7%) and exports fell 2.7% m/m (last 4.2%).
  • Eurozone's March Retail Sales dipped 0.1% m/m (expected -0.3%: last -0.3%) but were up 1.2% yr/yr (expected 1.0%; last 1.3%). April Construction PMI hit 41.7 (last 44.6).
  • Germany's March Factory Orders rose 5.0% m/m (expected 1.0%; last 1.4%).
  • U.K.'s April Construction PMI hit 39.7 (expected 45.8; last 45.6).
  • France's March trade deficit reached EUR6.9 bln (expected deficit of EUR6.7 bln; last deficit of EUR5.5 bln) and March Current Account deficit reached EUR8.20 bln (last deficit of EUR1.50 bln).
  • Swiss April Unemployment Rate remained at 3.0%, as expected.
• Commodities:
  • WTI Crude: -3.3% to $91.93/bbl
  • Gold: +1.2% to $4748.00/ozt
  • Copper: +0.5% to 6.216/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1767
  • GBP/USD: +0.2% to 1.3615
  • USD/CNH: -0.2% to 6.7981
  • USD/JPY: +0.1% to 156.40
• Data out Today:
  • 8:30 ET: Preliminary Q1 Productivity (Briefing.com consensus 1.8%; prior 1.8%) and preliminary Q1 Unit Labor Costs (Briefing.com consensus 2.7%; prior 4.4%), weekly Initial Claims (Briefing.com consensus 205,000; prior 189,000), and Continuing Claims (prior 1.785 mln)
  • 10:00 ET: February Construction Spending (Briefing.com consensus 0.2%; prior -0.3%) and March Construction Spending (Briefing.com consensus 0.4%; prior NA)
  • 10:30 ET: Weekly natural gas inventories (prior +79 bcf)
  • 15:00 ET: March Consumer Credit (Briefing.com consensus $12.5 bln; prior $9.5 bln)