Bond Market Update

Long End Lagging

• U.S. Treasuries were weaker in the overnight trade, which featured thin trading conditions and a data dump out of Japan that included an acceleration in November Tokyo CPI to 3.0% yr/yr from 2.6%. Seeing some curve steepening with the long end underperforming the front end before the 08:30 ET release of the November Adv. Intl. Trade In Goods, Adv. Retail Inventories, and Advance Wholesale Inventories Report. 2s10s spread out to 27 basis points from 25 basis points at yesterday's settlement. The U.S. Dollar Index is down 0.2% to 107.96.
• Yield Check:
  • 2-yr: unch at 4.33%
  • 3-yr: +1 bp to 4.36%
  • 5-yr: +2 bps to 4.45%
  • 10-yr: +2 bps to 4.60%
  • 30-yr: +4 bps to 4.80%

• News:
  • Russian President Putin rejects calls for immediate ceasefire, but says he is ready for talks with President-elect Trump on long peace agreement, according to Bloomberg
  • House Freedom Caucus Chair Andy Harris is questioning if the current House leadership is best to advance President-elect Trump's agenda, according to Politico
  • South Korea's legislature impeached Acting President Han Duck-soo (EWY), according to The Wall Street Journal
  • BOJ's Summary of Opinions from its December meeting conveyed a willingness to be patient before raising rates again
  • Japan's Cabinet approved a record JPY115.5 trillion budget for FY25/26
  • Japan's Tokyo CPI 3.0% yr/yr (last 2.6%) and Core CPI 2.4% yr/yr (expected 2.5%; last 2.2%)
  • Spain's November Retail Sales 1.0% yr/yr (expected 2.8%; last 3.4%)
• Commodities:
  • WTI crude: +0.8% to $70.20/bbl
  • Gold: -0.4% to $2643.10/ozt
  • Copper: -0.2% to $4.12/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0438
  • GBP/USD: +0.2% to 1.2555
  • USD/CNH: flat at 7.3043
  • USD/JPY: -0.2% to 157.75
• 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)