Bond Market Update

December Jobs Report on Tap

• U.S. Treasuries are on track for a modestly lower start in shorter tenors ahead of the 8:30 ET release of the Employment Situation report for December (Briefing.com consensus 154,000; prior 227,000), which will influence the market's rate cut expectations. Treasury futures spent the night in a steady retreat, reaching their lowest levels during the past hour. The overnight news flow was limited. The People's Bank of China said that it will suspend bond purchases this month due to a short supply and excess demand ahead of Tuesday's joint briefing with China's foreign exchange regulator regarding financial support for the economy. In Europe, Bank of England Deputy Governor Breeden tried to assuage concerns about recent volatility in the pound and Gilts, saying that the quantitative tightening program could be adjusted. Crude oil has rallied past its 200-day moving average (75.50) to a level not seen in three months while the U.S. Dollar Index is little changed at 109.18.
• Yield Check:
  • 2-yr: +2 bps to 4.29%
  • 3-yr: +2 bps to 4.36%
  • 5-yr: +1 bp to 4.47%
  • 10-yr: UNCH at 4.69%
  • 30-yr: UNCH at 4.93%

• News:
  • ANZ pulled forward its forecast for a rate cut from the Reserve Bank of Australia to February.
  • British supermarket operator Sainsbury was the latest retailer to report disappointing results for the holiday period.
  • Japan's November Household Spending was up 0.4% m/m (expected -0.9%; last 2.9%) but down 0.4% yr/yr (expected -0.6%; last -1.3%). November Leading Index fell to 107.0 from 109.1 (expected 107.2) and Coincident Indicator was down 1.5% m/m (last 2.8%).
  • India's November Industrial Production was up 5.2% yr/yr (expected 4.0%; last 3.7%) and November Manufacturing Output rose 5.8% m/m (last 4.4%).
  • France's November Consumer Spending rose 0.3% m/m (expected 0.1%; last -0.3%) and November Industrial Production ticked up 0.2% m/m (expected -0.1%; last -0.3%).
  • Italy's November Retail Sales were down 0.4% m/m (expected 0.2%; last -0.5%) but up 1.1% yr/yr (last 2.6%).
  • Spain's November Industrial Production was down 0.4% yr/yr (last 1.5%).
  • Swiss December Unemployment Rate remained at 2.6% (expected 2.7%).
• Commodities:
  • WTI Crude: +3.2% to $76.27/bbl
  • Gold: +0.6% to $2706.00/ozt
  • Copper: +0.5% to $4.332/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0305
  • GBP/USD: +0.1% to 1.2316
  • USD/CNH: -0.1% to 7.3440
  • USD/JPY: -0.1% to 157.99
• Data out Today:
  • 8:30 ET: December Nonfarm Payrolls (Briefing.com consensus 154,000; prior 227,000), Nonfarm Private Payrolls (Briefing.com consensus 140,000; prior 194,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.2%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)
  • 10:00 ET: Preliminary January University of Michigan Consumer Sentiment (Briefing.com consensus 73.5; prior 74.0)