Bond Market Update

Mixed Start Ahead

• U.S. Treasuries are on track for a mixed start after a strong rally to begin the week. Treasury futures dipped in early evening action, seeing more selling once the focus turned to Europe, though that wave was reversed during the past couple hours. President-elect Trump made headlines overnight, by threatening to impose a 25% tariff on imports from Mexico and Canada, and an additional 10% on imports from China, on day one of his presidency. The market did not receive any noteworthy economic reports overnight while data released during the U.S. session will focus on housing and Consumer Confidence (Briefing.com consensus 113.0; prior 108.7) for November. Crude oil is bouncing from yesterday's retreat while the U.S. Dollar Index is down 0.2% at 106.56.
• Yield Check:
  • 2-yr: -3 bps to 4.24%
  • 3-yr: -1 bp to 4.20%
  • 5-yr: UNCH at 4.17%
  • 10-yr: +1 bp to 4.28%
  • 30-yr: +2 bps to 4.47%

• News: 
  • Minneapolis Fed President (non-voter) Kashkari said that it is reasonable to consider a rate cut in December.
  • The Reserve Bank of Australia expects weaker domestic growth and lower interest rates under the incoming Trump administration in the U.S.
  • China's Commerce Ministry pledged to strengthen communication and expand cooperation with the U.S. 
  • European Central Bank policymaker Makhlouf said that he is open minded regarding the pace of rate cuts while policymaker Nagel cautioned against cutting too quickly.
  • The European Commission is expected to approve France's plan for spending and reforms, but there is still a likelihood of a snap election being forced next year.
  • Japan's November Corporate Services Price Index was up 2.9% yr/yr (expected 2.5%; last 2.8%).
  • South Korea's November Consumer Confidence hit 100.7 (last 101.7).
  • Hong Kong's October trade deficit reached $31.0 bln (last deficit of $53.2 bln) as imports rose 4.5% m/m (last 1.4%) and exports grew 3.5% m/m (last 4.7%).
  • Singapore's October Industrial Production was up 0.1% m/m (expected -0.8%; last -1.5%), rising 1.2% yr/yr (expected 1.5%; last 9.0%).
  • U.K.'s November CBI Distributive Trades Survey fell to -18 from -6 (expected -14).
• Commodities:
  • WTI Crude: +0.5% to $69.27/bbl
  • Gold: +0.5% to $2632.40/ozt
  • Copper: +0.1% to $4.102/lb
• Currencies:
  • EUR/USD: +0.3% to 1.0523
  • GBP/USD: +0.3% to 1.2604
  • USD/CNH: +0.2% to 7.2574
  • USD/JPY: -0.6% to 153.29
• Data out Today: 
  • 9:00 ET: September FHFA Housing Price Index (prior 0.3%) and September S&P Case-Shiller Home Price Index (Briefing.com consensus 4.7%; prior 5.2%)
  • 10:00 ET: November Consumer Confidence (Briefing.com consensus 113.0; prior 108.7) and October New Home Sales (Briefing.com consensus 718,000; prior 738,000) 
  • 14:00 ET: November FOMC Minutes
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results