Bond Market Update

Buying Persists

• U.S. Treasuries are seeing continued buying interest amid thin trading conditions on the last day of the year. Several foreign markets of note (Japan, South Korea, Germany, Italy, and Switzerland) were closed today for the New Year's holiday while others (Hong Kong, UK, France, and Spain) were slated for early closes. It is a full day of trading here and the bias so far is positive (for stocks and bonds). The mid-week market closures have fostered some safe-haven buying interest that is benefiting Treasuries along with rebalancing activity.
• Yield Check:
  • 2-yr: -2 bps to 4.23%
  • 3-yr: -2 bps to 4.26%
  • 5-yr: -2 bps to 4.35%
  • 10-yr: -3 bps to 4.52%
  • 30-yr: -3 bps to 4.73%

• News:
  • Chinese President Xi says GDP growth will be around 5% next year, according to Bloomberg
  • Chinese hackers stole documents from Treasury Department, according to Reuters
  • China wants its own chips in its EVs, according to The Wall Street Journal
  • China's December manufacturing PMI report for Decembe checked in at 50.1, just barely above the expansion threshold of 50.0 but down from 50.3 in November
  • Germany, Italy, and Switzerland were closed for the New Year's holiday. France, the UK, and Spain have early closes.
  • Japan and South Korea closed for New Year's holiday. Hong Kong had an early close.
  • South Korea's December CPI 0.4% m/m (expected 0.2%; last -0.3%) and 1.9% yr/yr (expected 1.7%; last 1.5%)
• Commodities:
  • WTI crude: +0.4% to $71.28/bbl
  • Gold: +0.2% to $2623.00/ozt
  • Copper: -1.3% to $4.04/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0400
  • GBP/USD: -0.1% to 1.2539
  • USD/CNH: +0.4% to 7.3395
  • USD/JPY: flat at 156.85
• The Day Ahead:
  • 09:00 ET: October FHFA Housing Price index (prior 0.7%)
  • 09:00 ET: October S&P Case-Shiller Home Price index (Briefing.com consensus 4.2%; prior 4.6%)