Bond Market Update

Mixed on Tuesday

• U.S. Treasuries finished Tuesday in mixed fashion with 3s and 2s recording modest gains while longer tenors finished in the red after outperforming yesterday. The trading day started with relative strength up front after a night that saw news of China banning exports of germanium, gallium, antimony, and other materials to the U.S. and a looming confidence vote in France's Prime Minister Barnier, who is likely to lose his post, forcing President Macron to appoint a caretaker prime minister. Treasuries climbed during the initial hour of action, briefly lifting all tenors into positive territory. However, the market found resistance just above yesterday's highs, resulting in a slow reversal as the day went on. The reversal sent the 5-yr note and longer tenors to fresh lows in afternoon trade while the short end held up better, finishing comfortably above lows from morning action. The intraday pullback from highs was assisted by the release of the Job Openings and Labor Turnover Survey for October, which showed that job openings increased to 7.744 million from a downwardly revised 7.372 million (from 7.443 million) in September. Crude oil rallied toward its 50-day moving average (70.50) while the U.S. Dollar Index slipped 0.1% to 106.36.
• Yield Check:
  • 2-yr: -3 bps to 4.17%
  • 3-yr: -1 bp to 4.13%
  • 5-yr: +1 bp to 4.11%
  • 10-yr: +3 bps to 4.22%
  • 30-yr: +3 bps to 4.39%

• News:
  • South Korean President Yoon declared martial law, but the South Korean parliament voted 190-0 to reverse the decision within two hours. President Yoon later decided to lift the order.
  • 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).
• Today's Data:
  • Job openings increased to 7.744 million in October from a revised 7.372 million (from 7.443 million) in September.
• Commodities:
  • WTI crude: +2.8% to $69.97/bbl
  • Gold: +0.4% to $2667.60/ozt
  • Copper: +1.7% to $4.20/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0511
  • GBP/USD: +0.2% to 1.2676
  • USD/CNH: +0.2% to 7.2966
  • USD/JPY: -0.1% to 149.43
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 6.3%)
  • 8:15 ET: November ADP Employment Change (Briefing.com consensus 170,000; prior 233,000)
  • 10:00 ET: November ISM Non-Manufacturing Index (Briefing.com consensus 55.5%; prior 56.0%)
  • 10:30 ET: Weekly crude oil inventories (prior -1.84 mln)