Bond Market Update

Selling Resumes

• U.S. Treasuries are on track for a sharply lower start after Monday's closure. Treasury futures began retreating on Sunday evening, remaining pressured into Monday morning. The market recovered some of its losses on Monday afternoon, but renewed pressure during the overnight session sent action past Monday's lows. Issues in the belly have been at the forefront of the weakness while most other sovereign debt has been on the rise amid weakness in global equities. Economic data released this morning showed weakness in Germany's ZEW Economic Sentiment (7.4; prior 13.1) due to the collapse of the ruling coalition and expectations for more tariffs from the Trump administration. Crude oil is looking to halt its two-day skid while the U.S. Dollar Index is up 0.3% at 105.83.
• Yield Check:
  • 2-yr: +6 bps to 4.31%
  • 3-yr: +7 bps to 4.27%
  • 5-yr: +7 bps to 4.26%
  • 10-yr: +6 bps to 4.37%
  • 30-yr: +4 bps to 4.52%

• News:
  • Chinese officials will reduce taxes on home purchases to support the property sector.
  • Japan's three largest banks are on track to reach record net income for the year.
  • Japan's Prime Minister Ishiba said that more than JPY10 trln will be spent to support chip and AI companies by fiscal 2030.
  • Germany will hold a federal election on February 23.
  • Germany's metal workers union agreed to a one-time bonus, a 2.0% pay increase in April 2025, followed by a 3.1% increase in 2026.
  • Japan's October M2 Money Stock increased 1.2% yr/yr (expected 1.5%; last 1.2%) and October Machine Tool Orders were up 9.3% yr/yr (last -6.5%).
  • India's October CPI was up 6.21% yr/yr (expected 5.81%; last 5.49%). September Industrial Production rose 3.1% yr/yr (expected 2.5%; last -0.1%). September Manufacturing Output grew 3.9% m/m (last 1.0%).
  • Australia's November Westpac Consumer Sentiment rose 5.3% (last 6.2%). October Business Survey remained at 7 and Business Confidence rose to 5 from -2.
  • New Zealand's October Electronic Card Retail Sales were up 0.6% m/m (last 0.1%), but down 1.1% yr/yr (last -5.6%).
  • Eurozone's November ZEW Economic Sentiment fell to 12.5 from 20.1 (expected 13.2).
  • Germany's October CPI was up 0.4% m/m, as expected (last 0.0%), rising 2.0% yr/yr (expected 2.0%; last 1.6%). November ZEW Economic Sentiment fell to 7.4 from 13.1 (expected 13.2) and ZEW Current Conditions fell to -91.4 from -86.9 (expected -86.0).
  • U.K.'s September Average Earnings Index + Bonus rose 4.3% yr/yr (expected 3.9%; last 3.9%). October Claimant Count reached 26,700 (expected 30,500; last 10,100). September Unemployment Rate rose to 4.3% from 4.0% (expected 4.1%).
• Commodities:
  • WTI Crude: +0.8% to $68.58/bbl
  • Gold: -0.4% to $2607.90/ozt 
  • Copper: -1.8% to $4.155/lb
• Currencies:
  • EUR/USD: -0.3% to 1.0619
  • GBP/USD: -0.4% to 1.2818
  • USD/CNH: +0.2% to 7.2398
  • USD/JPY: +0.2% to 154.05
• Data out Today:
  • 6:00 ET: October NFIB Small Business Optimism (actual 93.7; prior 91.5)