Bond Market Update

Short End Ahead

• U.S. Treasuries are on track for a modestly lower start in longer tenors while the short end is expected to show some early strength, making for a reversal of yesterday's dynamic. Treasury futures faced some overnight pressure, reaching lows around the start of the European session, followed by a bounce that has been most pronounced up front. Overnight, China's Ministry of Commerce banned exports of germanium, gallium, antimony, and other materials to the U.S. In Europe, France's Prime Minister Barnier will face a confidence vote tomorrow that will likely force President Macron to appoint another caretaker prime minister. The overnight data slate was limited and things will remain quiet on that front during the U.S. session with the market set to receive just one report—October job openings (prior 7.433 mln)—at 10:00 ET. Crude oil is on the rise while the U.S. Dollar Index is down 0.1% at 106.30, masking the greenback's rise to a 13-month high against the yuan.
• Yield Check:
  • 2-yr: -2 bps to 4.18%
  • 3-yr: -1 bp to 4.13%
  • 5-yr: UNCH at 4.10%
  • 10-yr: +1 bp to 4.21%
  • 30-yr: +3 bps to 4.39%

• News:
  • China Securities Times called for additional measures to support the economy in 2025.
  • European Central Bank policymaker Cipollone said that higher tariffs on exports to the U.S. would reduce growth and inflation in the eurozone.
  • Japan's November Monetary Base was down 0.3% yr/yr (expected 0.2%; last -0.3%).
  • South Korea's November CPI was down 0.3% m/m (expected -0.1%; last 0.0%) but up 1.5% yr/yr (expected 1.7%; last 1.3%).
  • Australia's Q3 Current Account deficit reached AUD14.1 bln (expected deficit of AUD10.3 bln; last deficit of AUD16.4 bln).
  • New Zealand's Q3 Terms of Trade Index was up 2.4% qtr/qtr (expected 1.2%; last 2.1%).
  • Swiss November CPI was down 0.1% m/m, as expected (last -0.1%) but up 0.7% yr/yr (expected 0.8%; last 0.6%).
  • Spain's November Unemployment decreased by 16,000 (expected 29,300; last 26,800).
• Commodities:
  • WTI Crude: +1.6% to $69.18/bbl
  • Gold: +0.2% to $2663.10/ozt
  • Copper: +1.1% to $4.174/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0510
  • GBP/USD: -0.1% to 1.2645
  • USD/CNH: +0.2% to 7.2994
  • USD/JPY: +0.1% to 149.70
• Data out Today:
  • 10:00 ET: October Job Openings (prior 7.443 mln)