Bond Market Update

Long End Leads Early Weakness

• U.S. Treasuries are on track for a lower start with longer tenors expected to show some relative weakness in early trade. Treasury futures inched higher during the Asian session, which saw more efforts to jawbone markets higher from Chinese officials and solidifying expectations for a rate hike from the Bank of Japan tomorrow. However, the slight overnight gains faded once the focus turned to action in Europe, where sovereign yields are slightly higher. The World Economic Forum is continuing in Davos, but today did not bring many comments from European Central Bank officials ahead of next week's expected rate cut. Meanwhile, Norway's Norges Bank kept its policy rate at 4.50%, but hinted at a rate cut coming in March. Crude oil is recovering some of its loss from yesterday while the U.S. Dollar Index is up 0.2% at 108.34.
• Yield Check:
  • 2-yr: UNCH at 4.30%
  • 3-yr: +1 bp to 4.36%
  • 5-yr: +3 bps to 4.46%
  • 10-yr: +4 bps to 4.64%
  • 30-yr: +5 bps to 4.86%

• News:
  • China Securities Regulatory Commission announced that at least CNY100 bln will flow into A-shares from state-owned insurers each year with a pilot scheme starting during the first half of 2025.
  • A People's Bank of China official said that liquidity tools will be enhanced and that requirements for share buyback loans are being lowered.
  • South Korean chipmaker SK Hynix reported record quarterly results coupled with somewhat cautious guidance.
  • European Central Bank President Lagarde warned that the region must prepare for potential trade policy shifts.
  • British Chancellor Reeves said that she will find ways to meet fiscal rules and that any additional measures that may be needed will be announced on March 26.
  • Japan's December trade surplus reached JPY130.9 bln (expected deficit of JPY55.0 bln; last deficit of JPY110.3 bln) as imports grew 1.8% yr/yr (expected 2.6%; last -3.8%) and exports rose 2.8% yr/yr (expected 2.3%; last 3.8%).
  • South Korea's Q4 GDP expanded 0.1% qtr/qtr (expected 0.2%; last 0.1%), growing 1.2% yr/yr (expected 1.4%; last 1.5%).
  • Singapore's December CPI was up 0.4% m/m (last 0.0%), rising 1.6% yr/yr (expected 1.5%; last 1.6%).
  • New Zealand's November External Migration & Visitors increased 5.9% m/m (last 6.3%).
  • U.K.'s January CBI Industrial Trends Orders rose to -34 from -40 (expected -35).
  • France's January Business Survey fell to 95 from 97 (expected 96).
• Commodities:
  • WTI Crude: +0.3% to $75.69/bbl
  • Gold: -0.8% to $2750.00/ozt
  • Copper: -0.6% to $4.276/lb
• Currencies:
  • EUR/USD: UNCH at 1.0403
  • GBP/USD: UNCH at 1.2315
  • USD/CNH: +0.2% to 7.2920
  • USD/JPY: UNCH at 156.40
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 219,000; prior 217,000) and Continuing Claims (prior 1.859 mln)
  • 10:30 ET: Weekly natural gas inventories (prior -258 bcf)
  • 12:00 ET: Weekly crude oil inventories (prior -1.96 mln)