Bond Market Update

Trimming Midweek Gains

• U.S. Treasuries are on track for a lower start after yesterday's strong intraday bounce. Treasury futures began drifting lower in early evening action, seeing some additional pressure once the focus turned to action in Europe. Expectations for a December rate hike from the Bank of Japan receded after BoJ policymaker Nakamura said that inflation could fall below the 2.0% target from fiscal 2025 and that he is skeptical about the sustainability of wage growth. However, Japan's 10-yr yield still ticked up a couple basis points to 1.06%. Meanwhile, ongoing demand for Chinese debt pressured China's 10-yr yield to a fresh record low of 1.941%. In Europe, France's Prime Minister Barnier resigned today, but he is likely to remain interim prime minister until President Macron names a successor. Crude oil holds a slight gain while the U.S. Dollar Index is down 0.1% at 106.18.
• Yield Check:
  • 2-yr: +3 bps to 4.15%
  • 3-yr: +4 bps to 4.12%
  • 5-yr: +4 bps to 4.10%
  • 10-yr: +3 bps to 4.21%
  • 30-yr: +2 bps to 4.37%

• News:
  • South Korea's President Yoon is likely to face an impeachment vote this weekend. Meanwhile, South Korea's metal workers union threatened to go on strike on Wednesday until President Yoon resigns from office.
  • European Central Bank policymaker Kazaks said that a rate cut should be made next week.
  • The Bank of England's Decision Maker Panel raised its year-ahead CPI forecast to 2.7% from 2.5% while the three-year outlook remained at 2.6%.
  • Italy's Stats Agency lowered its domestic growth forecast for 2024 to 0.5% from 1.0% while the outlook for 2025 was reduced to 0.8% from 1.1%.
  • South Korea's Q3 GDP was up 0.1% qtr/qtr (expected 0.5%; last 0.1%), rising 1.5% yr/yr, as expected (last 1.5%).
  • Singapore's October Retail Sales rose 0.1% m/m (last 0.4%), increasing 2.2% yr/yr (last 1.9%).
  • Australia's October trade surplus reached AUD5.95 bln (expected surplus of AUD4.53 bln; last surplus of AUD4.53 bln) as imports ticked up 0.1% m/m (last -2.8%) and exports rose 3.6% m/m (last -4.7%).
  • Eurozone's October Retail Sales were down 0.5% m/m (expected -0.4%; last 0.5%) but up 1.9% yr/yr (expected 1.7%; last 3.0%).
  • Germany's October Factory Orders fell 1.5% m/m (expected -2.0%; last 4.2%).
  • U.K.'s November Construction PMI hit 55.2 (expected 53.5; last 54.3).
  • France's October Industrial Production was down 0.1% m/m (expected 0.3%; last -0.8%).
  • Spain's October Industrial Production rose 1.9% yr/yr (expected 0.3%; last 1.1%).
  • Swiss November Unemployment Rate remained at 2.6% (expected 2.7%).
• Commodities:
  • WTI Crude: +0.1% to $68.59/bbl
  • Gold: -0.1% to $2674.20/ozt
  • Copper: UNCH at $4.202/lb
• Currencies:
  • EUR/USD: +0.3% to 1.0537
  • GBP/USD: +0.2% to 1.2727
  • USD/CNH: -0.1% to 7.2715
  • USD/JPY: -0.1% to 150.40
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 213,000; prior 213,000), Continuing Claims (prior 1.907 mln), and October Trade Balance (Briefing.com consensus -$75.1 bln; prior -$84.4 bln)
  • 10:30 ET: Weekly natural gas inventories (prior -2 bcf)