Bond Market Update

November CPI Ahead

• U.S. Treasuries are on track for a lower start ahead of the highly anticipated release of November CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%) at 8:30 ET. The lower start will follow a night that saw selling during the Asian session, followed by a short-lived bounce once the focus turned to action in Europe. Overnight news included the release of Japan's PPI for November, which accelerated to 3.7% yr/yr from 3.6%, hitting a level not seen since mid-2023. In Europe, German Chancellor Scholz formally requested a confidence vote, which could take place on Monday and is likely to lead to a snap election in February. Crude oil is seeking a third consecutive advance with its 50-day moving average (70.37) looming above despite OPEC's lowered global oil demand forecast for the year while the U.S. Dollar Index is up 0.2% at 106.64.
• Yield Check:
  • 2-yr: +2 bps to 4.17%
  • 3-yr: +1 bp to 4.12%
  • 5-yr: +2 bps to 4.12%
  • 10-yr: +2 bps to 4.24%
  • 30-yr: +3 bps to 4.44%

• News:
  • OPEC reduced its global oil demand growth forecast for 2024 by 210 tb/d while the outlook for 2025 was trimmed by 90 tb/d.
  • China Securities Journal speculated that bigger cuts to interest rates, including the reserve requirement ratio, will be made next year.
  • South Korea's opposition party warned that it will keep calling for an impeachment of President Yoon every Saturday.
  • Japan's Prime Minister Ishiba said that a decision on tax reforms should be reached around the middle of December.
  • Japan's November PPI was up 0.3% m/m (expected 0.2%; last 0.3%), rising 3.7% yr/yr (expected 3.4%; last 3.6%). Q4 BSI Large Manufacturing Conditions rose to 6.3 from 4.5 (expected 1.8). December Reuters Tankan Index fell to -1 from 5. Q3 GDP External Demand was down 0.2% qtr/qtr (expected -0.4%; last -0.1%).
  • South Korea's November Unemployment Rate remained at 2.7%.
  • New Zealand's Q3 Manufacturing Sales Volume was down -1.2% qtr/qtr (last 0.6%).
• Commodities:
  • WTI Crude: +1.2% to $69.44/bbl
  • Gold: +0.3% to $2726.00/ozt
  • Copper: -0.2% to $4.264/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0503
  • GBP/USD: -0.2% to 1.2740
  • USD/CNH: +0.2% to 7.2717
  • USD/JPY: +0.5% to 152.65
• Data out Today:
  • 7:00ET: Weekly MBA Mortgage Index (actual 5.4%; prior 2.8%)
  • 8:30 ET: November CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%)
  • 10:30 ET: Weekly crude oil inventories (prior -5.07 mln)
  • 14:00 ET: November Treasury Budget (prior -$257.0 bln)
• Treasury Auctions:
  • 13:00 ET: $39 bln 10-yr Treasury note reopening results