Bond Market Update

Steady Start Ahead of November Jobs Report

• U.S. Treasuries are on track for a slightly lower start in shorter tenors, but some early volatility is likely to surround the 8:30 ET release of the Employment Situation report for November (Briefing.com consensus 200,000; prior 12,000), which the market hopes will show a strong rebound in hiring activity after a weather-impacted October. Treasuries held their ground during the Asian session, which included press reports from Japan, suggesting that the Bank of Japan wants to hike rates by March, though a final decision has not been made yet. Treasury futures fell to lows during the European session, which has seen relative strength in French equities after President Macron indicated that a caretaker prime minister will be named soon. Crude oil is falling toward its November low (66.61) while the U.S. Dollar Index is up 0.1% at 105.79.
• Yield Check:
  • 2-yr: +1 bp to 4.16%
  • 3-yr: +1 bp to 4.11%
  • 5-yr: UNCH at 4.08%
  • 10-yr: UNCH at 4.18%
  • 30-yr: -1 bp to 4.33%

• News:
  • The U.S. exempted some Chinese chipmakers from export restrictions as a goodwill gesture to Japan. 
  • China Securities Times noted that domestic investment is expected to improve next year.
  • There was continued political uncertainty in South Korea, as speculation mounted that martial law could be imposed again ahead of tomorrow's impeachment vote against President Yoon.
  • The Reserve Bank of India left its policy rate at 6.50%, as expected, but it also lowered its cash reserve ratio by 50 basis points to 4.00%, which was not expected.
  • Bank of England policymaker Greene expressed concern about sluggish consumer spending.
  • The Confederation of British Industry lowered its domestic growth forecast for 2024 to 0.9% from 1.0% and trimmed the outlook for 2025 to 1.6% from 1.9%.
  • Volkswagen's unionized metal workers in Germany are planning a four-hour strike for Monday.
  • Japan's October Household Spending was up 2.9% m/m (expected 0.4%; last -1.3%) but down 1.3% yr/yr (expected -2.6%; last -1.1%). October Wage Income was up 2.6% yr/yr, as expected (last 2.5%). October Leading Index fell to 108.6 from 109.1 (expected 108.9) and Coincident Indicator was up 2.5% m/m (last 0.7%).
  • South Korea's October Current Account surplus reached $9.78 bln (last surplus of $10.94 bln).
  • Eurozone's Q3 GDP expanded 0.4% qtr/qtr, as expected (last 0.4%), growing 0.9% yr/yr, as expected (last 0.6%). Q3 Employment increased by 0.2% qtr/qtr, as expected (last 0.2%), rising 1.0% yr/yr, as expected (last 1.0%).
  • Germany's October Industrial Production was down 1.0% m/m (expected 1.0%; last -2.0%), falling 4.8% yr/yr (last -4.2%).
  • U.K.'s November Halifax House Price Index was up 1.3% m/m (expected 0.3%; last 0.4%), rising 4.8% yr/yr (expected 3.6%; last 4.0%).
  • France's October trade deficit reached EUR7.7 bln (expected deficit of EUR8.0 bln; last deficit of EUR8.4 bln) and October Current Account deficit reached EUR2.6 bln (last deficit of EUR2.4 bln).
  • Italy's October Retail Sales were down 0.5% m/m (expected 0.9%; last 1.3%), but up 2.6% yr/yr (last 0.7%).
• Commodities:
  • WTI Crude: -0.8% to $67.77/bbl
  • Gold: +0.5% to $2661.40/ozt
  • Copper: +0.9% to $4.231/lb
• Currencies:
  • EUR/USD: UNCH at 1.0583
  • GBP/USD: +0.1% to 1.2770
  • USD/CNH: +0.1% to 7.2669 
  • USD/JPY: +0.2% to 150.42
• Data out Today:
  • 8:30 ET: November Nonfarm Payrolls (Briefing.com consensus 200,000; prior 12,000), Nonfarm Private Payrolls (Briefing.com consensus 200,000; prior -28,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.1%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)
  • 10:00 ET: Preliminary December University of Michigan Consumer Sentiment (Briefing.com consensus 73.5; prior 71.8)
  • 15:00 ET: October Consumer Credit (Briefing.com consensus $10.5 bln; prior $6.0 bln)