Bond Market Update

Pushing Higher

• U.S. Treasuries are on track for a modestly higher start, looking for a continuation of Wednesday's rally. Treasury futures inched higher on Thursday morning, accelerating to fresh highs once the futures market reopened last evening. The advance continued into the night with the market reaching highs during the European session alongside gains in other sovereign debt. The Asian session was underscored by growing speculation about a December 19 rate hike from the Bank of Japan after Tokyo CPI for November increased at a rate not seen since August. Meanwhile, in Europe, eurozone's flash CPI report for November showed an in-line acceleration in the yr/yr CPI growth rate (to 2.3% from 2.0%) while core CPI remained at 2.7% yr/yr against expectations for an uptick to 2.8%. The market received a big batch of economic data overnight, but the U.S. session will be quiet on that front. Crude oil holds a slim gain while the U.S. Dollar Index is down 0.1% at 106.04. Keep in mind that NYSE will close at 13:00 ET and the Treasury market will close at 14:00 ET.
• Yield Check:
  • 2-yr: -1 bp to 4.20%
  • 3-yr: -2 bps to 4.14%
  • 5-yr: -1 bp to 4.10%
  • 10-yr: -2 bps to 4.22%
  • 30-yr: -3 bps to 4.40%

• News:
  • OPEC+ postponed its Sunday meeting until Thursday.
  • Reserve Bank of Australia Governor Bullock said that there is a low likelihood of rate cuts in the near future.
  • France will continue its budget debate next week and there is a growing likelihood that Prime Minister Barnier will face a confidence vote.
  • Standard & Poor's will release its review of France's sovereign rating later today.
  • European Central Bank policymaker Stournaras said that tougher trade restrictions from the U.S. could invite sharper rate cuts.
  • Japan's October Industrial Production was up 3.0% m/m (expected 3.8%; last 1.6%) and October Retail Sales rose 1.6% yr/yr (expected 2.1%; last 0.7%). November Tokyo CPI was up 2.6% yr/yr (last 1.8%) and Tokyo Core CPI was up 2.2% yr/yr (expected 2.0%; last 1.8%). October Housing Starts fell 2.9% yr/yr (expected -2.0%; last -0.6%) and November Household Confidence rose to 36.4 from 36.2, as expected.
  • South Korea's October Industrial Production was unchanged m/m (expected 0.6%; last -0.1%), rising 6.3% yr/yr (expected 2.4%; last -1.4%). October Retail Sales were down 0.4% m/m (last -0.5%).
  • Hong Kong's October Retail Sales were down 2.9% yr/yr (last -6.9%).
  • Australia's October Private Sector Credit was up 0.6% m/m (expected 0.5%; last 0.5%) and Housing Credit was up 0.5% m/m (last 0.5%).
  • Eurozone's November CPI was down 0.3% m/m (last 0.3%) but up 2.3% yr/yr, as expected (last 2.0%). November Core CPI was down 0.6% m/m (last 0.2%) but up 2.7% yr/yr (expected 2.8%; last 2.7%).
  • Germany's October Retail Sales fell 1.5% m/m (expected -0.5%; last 1.6%), increasing 1.0% yr/yr (expected 3.2%; last 0.9%). October Import Price Index was up 0.6% m/m (expected 0.2%; last -0.4%) and Export Price Index was down 0.8% yr/yr (expected -1.2%; last -1.3%). November Unemployment increased by 7,000 (expected 20,000; last 27,000) and unemployment rate remained at 6.1%, as expected.
  • U.K.'s October Mortgage Lending reached GBP3.44 bln (expected GBP2.85 bln; last GBP2.57 bln) and Net Lending to Individuals reached GBP4.53 bln (expected GBP4.10 bln; last GBP3.80 bln).
  • France's September Consumer Spending was down 0.4% m/m (expected -0.1%; last 0.1%). November CPI was up 0.1% m/m (expected 0.0%; last 0.2%), rising 1.3% yr/yr (expected 1.5%; last 1.2%). October PPI was up 0.9% m/m (expected 0.0%; last -0.1%) but down 5.7% yr/yr (last -6.9%). Q3 GDP expanded 0.4% qtr/qtr, as expected (last 0.2%), growing 1.2% yr/yr (expected 1.3%; last 1.0%). Q3 Nonfarm Payrolls increased 0.2% qtr/qtr (expected -0.1%; last 0.0%).
  • Italy's September Industrial Sales were down 0.3% m/m (last -0.3%), falling -5.7% yr/yr (last -4.9%). November CPI was unchanged m/m (expected -0.2%; last 0.0%), rising 1.4% yr/yr, as expected (last 0.9%).
  • Spain's October Retail Sales rose 3.5% yr/yr (last 4.2%). September Current Account surplus reached EUR4.10 bln (last surplus of EUR5.63 bln).
  • Swiss Q3 GDP expanded 0.4% qtr/qtr, as expected (last 0.6%), growing 2.0% yr/yr (expected 1.8%; last 1.5%). November KOF Leading Indicators rose to 101.8 from 99.7 (expected 100.1).
• Commodities:
  • WTI Crude: +0.3% to $68.91/bbl
  • Gold: +0.7% to $2683.00/ozt
  • Copper: -0.1% to $4.133/lb
• Currencies:
  • EUR/USD: UNCH at 1.0553
  • GBP/USD: UNCH at 1.2687
  • USD/CNH: UNCH at 7.2487
  • USD/JPY: -0.9% to 150.22
• No Data on Today's Schedule