Yields rebound, close nearly flat on US economic strength. Yields dropped 6 bps overnight but then climbed to intraday highs following this morning’s US economic data. Private employment, retail sales, and manufacturing prints were all stronger than expected and signaled that the economy remains resilient, making further easing less of a priority. Yields closed within 2 bps of opening levels across the curve, with this morning’s Treasury sell-off holding despite President Trump’s claim that Iran asked for a ceasefire. The optimism was more apparent in equities, where the NASDAQ climbed 1.16% to 21,841 and the S&P 500 rose 0.72% to 6,575.
US manufacturing expands by most since mid-2022. March ISM manufacturing data came in at 52.7 today, above the 52.3 estimate and 52.4 in the prior month. The level marks the largest expansion in US manufacturing activity since 2022, as thirteen industries reported growth, led by primary metals and transportation equipment. Meanwhile, the Iran war pushed the ISM Prices Paid Index to 78.3, above estimates of 74.0 and February’s 70.5. The index has climbed 17 points in the past two months, the largest increase in almost a decade. Higher input costs may cause manufacturers to raise prices, a sign that inflation could run hot throughout the year.
Trump and Iran offer conflicting remarks on war. President Trump posted on Trust Social today that Iran’s “new regime president” had requested a cease-fire, stating the US would only consider the offer “when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion.” His comments contradicted yesterday’s reports that the US is willing to end the war without the Strait being open and that the US would rely on foreign nations to make further progress. Meanwhile, Iran’s foreign ministry refuted today’s claim, calling the cease-fire request “false and baseless,” according to state television. President Trump is expected to make remarks this evening on the state of the war.