Bond Market Update

Lost ground reclaimed

• U.S. Treasuries started today's session weighed down by selling pressure but ended it with a measure of relief from renewed buying interest. Trading conditions were thin with market closures for Boxing Day throughout Europe and in a handful of markets in the Asia-Pacific region. Yields were higher for much of the morning session with the 10-yr scraping 4.64% shortly after the better-than-expected initial jobless claims report at 8:30 a.m. ET. Selling efforts, though, began to fade and ultimately dissipated after the $44 billion 7-yr note auction at 1:00 p.m. ET was met with strong dollar demand and interest from indirect bidders. The 10-yr note yield retraced its steps to 4.58% and settled near its lows for the session.
• Yield Check:
  • 2-yr: -1 bp to 4.33%
  • 3-yr: -2 bps to 4.35%
  • 5-yr: -1 bp to 4.43%
  • 10-yr: -1 bp to 4.58%
  • 30-yr: unch at 4.76%

• News:
  • Mastercard SpendingPulse says US retail sales excluding automotive increased 3.8% yr/yr from November 1 through December 24
  • The PBOC left its MLF rate unchanged at 2.00%, as expected, and withdrew a net CNY1.15 trillion that was the largest withdrawal since 2014, according to Bloomberg
  • South Korea's opposition party says it will attempt to impeach acting president Han Duck-soo, driving the Korean won to its lowest level against dollar since the global financial crisis
  • President Biden directed the Department of Defense to continue its surge of weapons deliveries to Ukraine
  • President-elect Trump is expected to roll back many clean energy subsidies, according to New York Times
  • European markets, along with a handful of Asian markets, were closed for holiday
  • $44 bln 7-yr note auction met with solid dollar demand and outsized takedown by indirect bidders, completing a round of well-received auctions (2-yr, 5-yr, and 7-yr) this week
• Today's Data:
  • Initial jobless claims for the week ending December 21 decreased by 1,000 to 219,000 (Briefing.com consensus 232,000) and continuing jobless claims for the week ending December 14 increased by 46,000 to 1.910 million -- the highest level since November 13, 2021.
    • The key takeaway from the report is that layoff activity is low; however, if one loses their job, it is becoming more challenging to find a new position.
• Commodities:
  • WTI crude: -0.6% to $69.65/bbl
  • Gold: +0.7% to $2654.00/ozt
  • Copper: +0.5% to $4.13/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0420
  • GBP/USD: -0.2% to 1.2526
  • USD/CNH: flat at 7.3025
  • USD/JPY: +0.3% to 157.89
• The Day Ahead:
  • 08:30 ET: November Adv. Intl. Trade in Goods (prior -$99.1B), Adv. Retail Inventories (prior 0.1%), and Adv. Wholesale Inventories (0.2%)
  • 10:30 ET: EIA Natural Gas Inventories (prior -125 bcf)
  • 13:00 ET: EIA Crude oil Inventories (prior -0.934M)