Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market. Treasury futures saw very little movement during the Asian session, briefly rallying to highs once the focus turned to action in Europe. However, the bulk of those gains have been reversed during the past three hours. The overnight economic data flow was on the light side, but there were some news developments. Japan is now expected to approve its extra budget before year's end while the Chinese government is debating whether to set next year's growth target at 5.0% or as low as 4.0%. In geopolitical news, Ukraine said that it was hit by a Russian ICBM after the recent use of U.S. and British missiles against Russia, though subsequent reports disputed the type of a missile used by Russia. U.S. equity futures are climbing after overcoming some overnight weakness in the wake of NVIDIA's (NVDA) quarterly results, which beat expectations, but not by as big of a margin as the market had hoped. Crude oil is climbing toward its 50-day moving average (70.73) while the U.S. Dollar Index is little changed at 106.65.
• Yield Check:
  • 2-yr: UNCH at 4.31%
  • 3-yr: -1 bp to 4.25%
  • 5-yr: -2 bps to 4.26%
  • 10-yr: -2 bps to 4.39%
  • 30-yr: UNCH at 4.59%

• News:
  • There was speculation that OPEC+ will agree to maintain output at a reduced level when it meets on December 1.
  • China Securities Journal expects domestic banks to start cutting lending rates next year.
  • The founder of India's Adani Enterprises was hit with bribery charges from the U.S. Department of Justice, leading to a 22.6% dive in the India-listed stock. The company cancelled a planned sale of dollar-denominated bonds and the news also weighed on Australian investment manager GQG Partners.
  • European Central Bank policymaker Villeroy de Galhau said that inflation could make a sustainable return to the 2.0% target early next year and that restrictive policy should be eased more.
  • ECB policymaker Stournaras said that a 25-basis point cut should be made in December.
  • Germany's Bundesbank released its latest financial stability report, warning of a significant number of corporate bankruptcies expected next year.
  • Hong Kong's October CPI was up 0.2% m/m (last 0.1%), rising 1.4% yr/yr (last 2.2%).
  • New Zealand's October Credit Card Spending was up 0.3% yr/yr (last -3.1%).
  • U.K.'s October Public Sector Net Borrowing reached GBP17.35 bln (expected GBP14.10 bln; last GBP16.14 bln). November CBI Industrial Trends Orders rose to -19 from -27 (expected -25).
  • France's November Business Survey rose to 97 from 93 (expected 95).
• Commodities:
  • WTI Crude: +2.2% to $70.28/bbl
  • Gold: +0.6% to $2668.30/ozt
  • Copper: -0.5% to $4.135/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0526
  • GBP/USD: -0.1% to 1.2638
  • USD/CNH: -0.1% to 7.2444
  • USD/JPY: -0.6% to 154.43
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 221,000; prior 217,000), Continuing Claims (prior 1.873 mln), and November Philadelphia Fed survey (Briefing.com consensus 7.0; prior 10.3)
  • 10:00 ET: October Existing Home Sales (Briefing.com consensus 3.90 mln; prior 3.84 mln) and October Leading Indicators (Briefing.com consensus -0.3%; prior -0.5%)
  • 10:30 ET: Weekly natural gas inventories (prior +42 bcf)