Friday was a special session for US Treasury traders where the market opened just for them for roughly 4-hours to digest the data before they could head home to join the party with everyone else. US March Non-Farm Payroll beat expectations, headline at 236,000, 6,000 higher than expected. The dip in unemployment was a bit of a surprise, 3.5% vs 3.6% exp, but the participation rate edged up to 62.6%. US Treasuries fell as the curve flattened, 2yr yields climbing to 3.98%, and the probability of a rate hike strengthened.
Hong Kong and Australia are closed today, as is much of Europe. US treasuries were open today in Asia time, 10yr priced around 101-03 and on the curve 5/30's are +11bps. We will have to wait for US open to see how a more liquid market reacts to the Chinese military drills around Taiwan, which generated several minor confrontations over the weekend.
The week will be dominated by US CPI on Wednesday. Expectations are for a +0.4-0.5% rise for core and headline. US banks will kick off the US earnings season, JPMorgan, Citigroup and Wells Fargo being first in line and in US treasuries we have 3yr, 5yr and 30yr supply.
Bank of Korea and Bank of Canada are expected to keep rates steady at 3.5% and 4.5 respectively.
The real estate market in China continues to recover, with new home gross floor area (GFA) sold in 63 cities sampled by CICC rising 15% W/W as land auctions in core cities such as Shenzhen, Chengdu and Hefei are still rebounding. Land transactions remain low. In the 300 cities covered overall land plot area released fell by -42% Y/Y in March.
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