Bond Market Update

Padding Recent Gains

• U.S. Treasuries are on track for a higher start, seeking their fourth consecutive day of gains. Treasury futures spent the early part of the night in a sideways range, rising to highs during the past few hours, alongside solid gains in European sovereign debt. In Asia, China reported growth figures for December, achieving its 2024 GDP growth target of 5.0%, and there was a continued rise in expectations for a rate hike from the Bank of Japan at the end of next week. Elsewhere, the U.K. reported weak Retail Sales for December, prompting rising bets on a series of rate cuts from the Bank of England this year. The U.S. session will feature the release of December Housing Starts (Briefing.com consensus 1.318 mln; prior 1.289 mln) and Building Permits (Briefing.com consensus 1.454 mln; prior 1.505 mln) at 8:30 ET, followed by December Industrial Production (Briefing.com consensus 0.3%; prior -0.1%) at 9:15 ET. Crude oil holds a slim loss while the U.S. Dollar Index is up 0.1% at 109.05.
• Yield Check:
  • 2-yr: -1 bp to 4.23%
  • 3-yr: -1 bp to 4.29%
  • 5-yr: -2 bps to 4.38%
  • 10-yr: -3 bps to 4.58%
  • 30-yr: -3 bps to 4.81%

• News:
  • China Securities Times released a poll of 60 economists, predicting 2025 growth of at least 4.8%.
  • French Prime Minister Bayrou survived a no-confidence vote.
  • European Central Bank policymaker Stournaras spoke in favor of a series of rate cuts at upcoming ECB meetings.
  • China's Q4 GDP expanded 1.6% qtr/qtr, as expected (last 1.3%), growing 5.4% yr/yr (expected 5.0%; last 4.6%). 2024 GDP grew 5.0% (last 4.8%). December Industrial Production was up 6.2% yr/yr (expected 5.4%; last 5.4%), December Retail Sales rose 3.7% yr/yr (expected 3.5%; last 3.0%), and December Unemployment Rate ticked up to 5.1% from 5.0% (expected 5.0%). December Fixed Asset Investment was up 3.2% yr/yr (expected 3.3%; last 3.3%) and December House Prices fell 5.3% yr/yr (last -5.7%).
  • Singapore's December trade surplus reached SGD3.85 bln (last surplus of SGD6.49 bln) as non-oil exports grew 1.7% m/m (last 14.7%), increasing 9.0% yr/yr (last 3.4%).
  • New Zealand's December Business PMI hit 45.9 (last 45.2).
  • Eurozone's December CPI was up 0.4% m/m, as expected (last -0.3%), rising 2.4% yr/yr, as expected (last 2.2%). December Core CPI was up 0.5% m/m, as expected (last -0.6%), rising 2.7% yr/yr, as expected (last 2.7%). November Current Account surplus reached EUR27.0 bln (expected surplus of EUR28.0 bln; last surplus of EUR25.8 bln).
  • U.K.'s December Retail Sales were down 0.3% m/m (expected 0.4%; last 0.1%) but up 3.6% yr/yr (expected 4.2%; last 0.0%). December Core Retail Sales were down 0.6% m/m (expected 0.1%; last 0.1%) but up2.9% yr/yr (expected 3.6%; last -0.5%).
• Commodities:
  • WTI Crude: -0.1% to $77.74/bbl
  • Gold: -0.3% to $2742.30/ozt
  • Copper: -0.5% to $4.419/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0292
  • GBP/USD: -0.4% to 1.2184
  • USD/CNH: +0.2% to 7.3569
  • USD/JPY: +0.4% to 155.72
• Data out Today:
  • 8:30 ET: December Housing Starts (Briefing.com consensus 1.318 mln; prior 1.289 mln), Building Permits (Briefing.com consensus 1.454 mln; prior 1.505 mln)
  • 9:15 ET: December Industrial Production (Briefing.com consensus 0.3%; prior -0.1%) and Capacity Utilization (Briefing.com consensus 77.0%; prior 76.8%)
  • 16:00 ET: November Long-Term TIC Flows (prior $152.3 bln)