Bond Market Update

Treasuries Bucking Global Trend

• U.S. Treasuries are on track for a modestly higher start after a night that saw selling in most global equity and bond markets. Bond prices across Europe are under pressure, sending Italy's 10-yr yield (3.830%) higher by ten basis points to a level not seen since July while the U.K.'s 10-yr gilt yield (4.967%) is also creeping higher alongside continued weakness in the pound after British Chancellor Reeves said during a weekend trip to Beijing that the October budget is "non-negotiable." Earlier in the night, the People's Bank of China increased its cross-border macro-prudential parameter for the first time since mid-2023 to give domestic companies greater access to foreign capital. Economic data released overnight featured China's larger than expected trade surplus for December thanks to above-consensus growth in imports and exports. The market will not receive any U.S. data this morning, but the New York Fed will release its latest Survey of Consumer Expectations at 11:00 ET and the Treasury Budget for December (prior -$367.0 bln) will cross the wires at 14:00 ET. Crude oil is seeking a continuation of last week's rally while the U.S. Dolar Index is up 0.3% at 109.96.
• Yield Check:
  • 2-yr: -1 bp to 4.39%
  • 3-yr: UNCH at 4.48%
  • 5-yr: -1 bp to 4.58%
  • 10-yr: -2 bps to 4.76%
  • 30-yr: -3 bps to 4.94%

• News:
  • The Bank of Japan is reportedly still considering a rate hike and an increase to its inflation forecast at the policy meeting scheduled for the end of next week.
  • South Korea's exports through the first ten days of January were up 3.8% with chip exports jumping 23.8%.
  • European Central Bank Chief Economist Lane said that more easing is likely on the way from the ECB.
  • China's December trade surplus reached $104.84 bln (expected surplus of $100.00 bln; last surplus of $97.44 bln) as imports grew 1.0% yr/yr (expected -1.5%; last -3.9%) and exports rose 10.7% yr/yr (expected 7.3%; last 6.7%).
  • India's December CPI was up 5.22% yr/yr (expected 5.30%; last 5.48%).
  • Australia's December MI Inflation Gauge was up 0.6% m/m (last 0.2%). December ANZ Job Advertisements rose 0.3% m/m (last -1.8%).
  • New Zealand's November Building Consents increased 5.3% m/m (last -5.2%).
  • Swiss December SECO Consumer Climate rose to -30 from -37 (expected -38).
• Commodities:
  • WTI Crude: +2.3% to $78.36/bbl 
  • Gold: -0.8% to $2692.60/ozt
  • Copper: +0.2% to $4.311/lb
• Currencies:
  • EUR/USD: -0.4% to 1.0201
  • GBP/USD: -0.7% to 1.2124
  • USD/CNH: -0.1% to 7.3558
  • USD/JPY: -0.4% to 157.05
• Data out Today:
  • 14:00 ET: December Treasury Budget (prior -$367.0 bln)