Bond Market Update

Long End Behind

• U.S. Treasuries are on track for a slightly lower start in longer tenors while the short end is expected to show some relative strength in the early going. Treasury futures spent the night in a narrow range as trading activity continued slowing ahead of Christmas closures. The overnight slate of economic data and news was light with Japan's BoJ Core CPI showing an acceleration to 1.7% yr/yr from 1.5% while South Korea's Consumer Confidence fell at its fastest pace in 16 years after President Yoon briefly imposed martial law. The U.S. session will not include any data but the U.S. Treasury will continue this week's note auction slate with a $70 bln 5-yr note sale at 13:00 ET. Crude oil is back above its 50-day moving average (69.68) while the U.S. Dollar Index is up 0.1% at 108.14.
• Yield Check:
  • 2-yr: UNCH at 4.35%
  • 3-yr: +1 bp to 4.38%
  • 5-yr: +1 bp to 4.46%
  • 10-yr: +1 bp to 4.61%
  • 30-yr: +2 bps to 4.80%

• News:
  • Honda signed an agreement to consider integration with Nissan and announced a buyback.
  • The Reserve Bank of Australia released its latest policy minutes, setting the stage for rate cuts if the economy continues evolving in line with or below expectations.
  • France's new Finance Minister Lombard pledged to cut the budget deficit without impacting growth.
  • Japan's October BoJ Core CPI was up 1.7% yr/yr (expected 1.5%; last 1.5%).
  • South Korea's December Consumer Confidence fell to 88.4 from 100.7.
• Commodities:
  • WTI Crude: +0.7% to $69.74/bbl
  • Gold: +0.1% to $2630.50/ozt
  • Copper: +0.6% to $4.11/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0391
  • GBP/USD: +0.1% to 1.2550
  • USD/CNH: -0.1% to 7.3007
  • USD/JPY: UNCH at 157.12
• The Day Ahead:
  • 13:00 ET: NYSE early close
  • 14:00 ET: Treasury market early close
• Treasury Auctions:
  • 11:30 ET: $70 bln 5-yr Treasury note auction results