Bond Market Update

Long End Lags After Busy Night

• U.S. Treasuries are on track for a modestly lower start in longer tenors while the short end is set for a flatter open. Treasury futures inched higher during the Asian session but fell to lows once the focus shifted to Europe. The limited overall change masks a weekend that was rife with economic data and news developments. China altered its monetary stance to "moderately loose" from "prudent" after another deflationary CPI reading for November. The move gave a boost to consumer names, including European luxury goods makers. There is ongoing political uncertainty in South Korea after President Yoon survived a weekend impeachment vote but was also banned from leaving his country. Crude oil is on the rise after Syria's President Assad was ousted by rebel forces led by a former Al-Qaeda operative. The U.S. Dollar Index is flat at 106.04 after spending the night in a narrow range.
• Yield Check:
  • 2-yr: +1 bp to 4.11%
  • 3-yr: +1 bp to 4.07%
  • 5-yr: +2 bps to 4.05%
  • 10-yr: +3 bps to 4.18%
  • 30-yr: +4 bps to 4.37%

• News:
  • Fitch lowered its 2025 growth forecast for China to 4.3% from 4.5% and reduced the outlook for 2026 to 4.0% from 4.3%.
  • Nikkei speculated that the Bank of Japan may forego a rate hike next week in favor of an increase in January.
  • President-elect Trump said that he has no plans to force Fed Chairman Powell out of office.
  • President Macron is meeting with political leaders today in hopes of naming a caretaker prime minister in the coming days.
  • China's November CPI was down 0.6% m/m (expected -0.4%; last -0.3%) but up 0.2% yr/yr (expected 0.5%; last 0.3%). November PPI was down 2.5% yr/yr (expected -2.8%; last -2.9%).
  • Japan's Q3 GDP expanded 0.3% qtr/qtr (expected 0.2%; last 0.5%); Q3 GDP Price Index was up 2.4% yr/yr (expected 2.5%; last 3.2%), Q3 GDP Private Consumption rose 0.7% qtr/qtr (expected 0.9%; last 0.6%), and Q3 GDP Capital Expenditure was down 0.1% qtr/qtr (expected -0.2%; last 1.1%). October Current Account reached JPY2.41 trln (expected JPY2.28 trln; last JPY1.27 trln). November Bank Lending was up 3.0% yr/yr (expected 2.6%; last 2.6%) and November Economy Watchers Current Index hit 49.4 (expected 47.3; last 47.5).
  • Australia's October Building Approvals rose 4.2% m/m, as expected (last 5.8%) and Private House Approvals were down 5.2% m/m, as expected (last 4.1%).
  • Singapore's Q3 Unemployment Rate fell to 1.9% from 2.0%.
  • Eurozone's December Sentix Investor Confidence fell to -17.5 from -12.8 (expected -12.4).
  • Swiss November SECO Consumer Climate fell to -37 from -27 (expected -38).
• Commodities:
  • WTI Crude: +1.3% to $68.08/bbl
  • Gold: +0.7% to $2676.80/ozt
  • Copper: +1.6% to $4.265/lb
• Currencies:
  • EUR/USD: UNCH at 1.0566
  • GBP/USD: +0.2% to 1.2758
  • USD/CNH: -0.1% to 7.2721
  • USD/JPY: +0.5% to 150.76
• Data out Today:
  • 10:00 ET: October Wholesale Inventories (Briefing.com consensus 0.2%; prior -0.2%)