Bond Market Update

Catching a Bid

U.S. Treasuries caught a bid in the overnight trade, aided by some relatively weak December manufacturing PMI readings out of China and Europe, rebalancing activity to start the year, and some safe-haven interest following the horrific New Year's Day act of terror on Bourbon Street in New Orleans that killed 15 people and injured dozens more. The U.S. Dollar Index is up 0.3% to 108.79.

• Yield Check:
  • 2-yr: -3 bps to 4.21%
  • 3-yr: -3 bps to 4.24%
  • 5-yr: -5 bps to 4.33%
  • 10-yr: -5 bps to 4.52%
  • 30-yr: -4 bps to 4.74%
• News:
  • FBI investigating New Orleans truck attack as act of terrorism; 15 people were killed New Year's Day and dozens more were injured
  • Rep. Thomas Massie needs someone else to join him in order to prevent Rep. Mike Johnson from becoming Speaker of the House, according to The Wall Street Journal
  • Final December manufacturing PMIs out of Europe were little changed from flash estimates that showed an ongoing contraction in manufacturing activity in most countries, except Spain
  • The natural gas pipeline from Russia to Europe was stopped (as expected) after Ukraine refused to renew agreement, according to New York Times
  • ECB President Lagarde called attention to progress made in bringing down inflation and that she hopes the 2% target will be hit in 2025
  • Press reports indicate analysts think the PBOC could delay an RRR cut on account of the continuing weakness in the yuan and falling bond yields
  • Dockworkers will resume negotiations on January 7, according to Bloomberg
  • MBA Mortgage Applications for final two weeks of December -21.9% with refinance applications -36% and purchase applications -13% from two weeks before
  • South Korea's finance ministry lowered its 2025 GDP growth forecast to 1.8% from 2.2%
  • China's December Caixin Manufacturing PMI came in lower than expected (50.5 vs 51.6 expected) and signaled a slowdown in the pace of expansion
  • Eurozone's December HCOB Manufacturing PMI 45.1 (expected 45.2; last 45.2)
• Commodities:
  • WTI crude: +1.5% to $72.76/bbl
  • Gold: +0.6% to $2657.60/ozt
  • Copper: -0.2% to $4.02/lb
• Currencies:
  • EUR/USD: -0.3% to 1.0321
  • GBP/USD: -0.8% to 1.2420
  • USD/CNH: +0.1% to 7.3352
  • USD/JPY: -0.1% to 157.10
• The Day Ahead:
  • 08:30 ET Thursday: Initial Jobless Claims (Briefing.com consensus 224K; prior 219K) and Continuing Jobless Claims (prior 1910K)
  • 09:45 ET Thursday: December S&P Global US Manufacturing PMI - Final (prior 49.7)
  • 10:00 ET Thursday: November Construction Spending (Briefing.com consensus 0.2%; prior 0.4%)
  • 10:30 ET Thursday: EIA Crude Oil Inventories (prior -4.237M)