Bond Traders Weekly Outlook: 2-year Treasury Yield fell 73.5 in March, Biggest Monthly Drop Since January 2008

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    U.S. Treasuries on track for a lower start with the belly expected to show relative weakness in the early going.

    Treasury futures followed yesterday’s sharp slide with a higher start to the overnight session, but the modest early gains were erased toward the end of the Asian session. The overnight session was quiet in terms of economic data, but the market received a series of news headlines, including comments about central bank digital currency plans from officials in Japan and the eurozone.

    Treasury yields continue to climb this morning, reflecting the sentiment shift around bank stocks.

    The 2-yr note yield is back above 4.00%, up three basis points to 4.02%. The 10-yr note yield is up four basis points to 3.56%.

    The U.S. Dollar Index is down 0.3% to 102.56.

    Energy complex futures trade in mixed fashion. WTI crude oil futures are up 0.1% to $72.86/bbl and natural gas futures are down 0.9% to $2.19/mmbtu.

    2-yr: +2 bps to 4.02%
    3-yr: +5 bps to 3.84%
    5-yr: +4 bps to 3.64%
    10-yr: +3 bps to 3.56%
    30-yr: UNCH at 3.76%


    Early Bonds: U.S. Treasuries higher start after days of losses. Pending Home Sales and U.S. Treasury with a $35 bln 7-yr note sale.

    2-yr: -1 bp to 4.05%
    3-yr: -2 bps to 3.86%
    5-yr: -1 bp to 3.65%
    10-yr: UNCH at 3.56%
    30-yr: -1 bp to 3.77%


    The latest SCE Housing Survey from the New York Fed showed that household expectations for home price growth over the next year have slowed to 2.6% from 7.0% a year ago. Expectations for home price growth over the next five years increased to 2.8% from 2.2%. Rents are expected to increase 8.2%, down from an expected 11.5% increase in last year’s survey.


    Longer-dated Treasuries continue hovering near their flat lines while shorter tenors underperform, sitting near their lows.

    Shorter tenors retreated right at the cash start, responding to the 8:00 ET release of Germany’s March CPI (actual 0.8%; expected 0.7%). The report was a bit of a surprise since overnight action saw some strength in fixed income after CPI reports from Spain and a few German states were cooler than expected.

    U.S. Q4 GDP was revised down to 2.6% from 2.7% while initial claims increased but remained below the 200,000 level. Equities are off to a solid start,

    Looking to build on their big gains from yesterday. The S&P 500 (+0.5%) has extended this week’s advance to 1.9% while the Nasdaq (+0.7%) is now up 1.6% for the week.

    2-yr: +7 bps to 4.14%
    3-yr: +3 bps to 3.92%
    5-yr: +2 bps to 3.69%
    10-yr: UNCH at 3.57%
    30-yr: -2 bps to 3.76%


    U.S. Treasuries closed out March modestly higher, adding to their first quarter gains. The yield on the 2-year Treasury fell to 4.06%, down 3.7 basis
    [See the full post at: Bond Traders Weekly Outlook: 2-year Treasury Yield fell 73.5 in March, Biggest Monthly Drop Since January 2008]

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