Bond Market Update

Yields at January Lows Ahead of Q4 GDP

• U.S. Treasuries are on track for a higher start after a steady overnight rise in the futures market. The advance in the futures market made for a continuation of the bounce that developed after the brief retreat, which followed the release of the January FOMC Statement. Longer tenors have led the overnight advance, putting the 30-yr yield within a basis point of its low from January 2 ahead of the 8:30 ET release of the advance reading of Q4 GDP (Briefing.com consensus 2.3%; prior 3.1%). Before then, the market expects to hear about a 25-basis point rate cut from the European Central Bank. Crude oil is little changed, hovering just above its 50-day moving average (72.03) while the U.S. Dollar Index is flat at 108.00.
• Yield Check:
  • 2-yr: -3 bps to 4.20%
  • 3-yr: -4 bps to 4.23%
  • 5-yr: -6 bps to 4.30%
  • 10-yr: -6 bps to 4.50%
  • 30-yr: -5 bps to 4.74%

• News:
  • A regional American Airlines flight with 64 people on board crashed with a military helicopter near Reagan International Airport in D.C.
  • Japan and the U.S. are making preparations for a leaders meeting on February 7.
  • Toyota is reportedly planning a 10.4% increase to its production target for February through April.
  • Deutsche Bank reported a decrease in quarterly profit, contributing to a 36% decrease in net profit for the full year.
  • Australia's Q4 Import Price Index was up 0.2% qtr/qtr (expected 1.5%; last -1.4%) and Export Price Index was up 3.6% qtr/qtr (last -4.3%).
  • New Zealand's December trade surplus reached NZD219 mln (expected deficit of NZD1.363 bln; last deficit of NZD435 mln). January ANZ Business Confidence fell to 54.4 from 62.3.
  • Eurozone's flash Q4 GDP was unchanged qtr/qtr (expected 0.1%; last 0.4%), rising 0.9% yr/yr (expected 1.0%; last 0.9%). January Business and Consumer Survey hit 95.2 (expected 94.1; last 93.7). December Unemployment Rate rose to 6.3% from 6.2%, as expected.
  • Germany's flash Q4 GDP contracted 0.2% qtr/qtr (expected -0.1%; last 0.1%), falling 0.2% yr/yr (expected 0.0%; last -0.3%). December Import Price Index was up 0.4% m/m (expected 0.5%; last 0.9%), rising 2.0% yr/yr (expected 1.9%; last 0.6%).
  • U.K.'s December BoE Consumer Credit reached GBP1.045 bln (expected GBP950 mln; last GBP905 mln). December Mortgage Approvals hit 66,530 (expected 65,000; last 66,060) and Mortgage Lending reached GBP3.57 bln (expected GBP2.60 bln; last GBP2.55 bln).
  • France's flash Q4 GDP contracted 0.1% qtr/qtr (expected 0.0%; last 0.4%) but was up 0.7% yr/yr (last 1.2%). December Consumer Spending was up 0.7% m/m (expected 0.1%; last 0.2%).
  • Italy's flash Q4 GDP was unchanged qtr/qtr (expected 0.1%; last 0.0%), rising 0.5% yr/yr (expected 0.6%; last 0.4%). December Unemployment Rate rose to 6.2% from 5.9% (expected 5.7%).
  • Spain's January CPI was up 0.2% m/m (expected 0.0%; last 0.5%), rising 3.0% yr/yr (expected 2.9%; last 2.8%). January Core CPI was up 2.4% yr/yr (last 2.6%). January Business Confidence fell to -5.1 from -4.5.
  • Swiss January KOF Leading Indicators improved to 101.6 from 99.6 (expected 100.3). December trade surplus reached CHF3.49 bln (expected CHF4.50 bln; last CHF6.11 bln).
• Commodities:
  • WTI Crude: UNCH at $72.65/bbl
  • Gold: +1.0% to $2797.60/ozt
  • Copper: +0.5% to $4.304/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0403
  • GBP/USD: -0.1% to 1.2437
  • USD/CNH: +0.1% to 7.2681
  • USD/JPY: -0.6% to 154.17
• Data out Today:
  • 8:30 ET: Advance Q4 GDP (Briefing.com consensus 2.3%; prior 3.1%), advance Q4 GDP Deflator (Briefing.com consensus 2.4%; prior 1.9%), Weekly Initial Claims (Briefing.com consensus 221,000; prior 223,000), and Continuing Claims (prior 1.899 mln)
  • 10:00 ET: December Pending Home Sales (Briefing.com consensus 0.8%; prior 2.2%)
  • 10:30 ET: Weekly natural gas inventories (prior -223 bcf)