Bond Market Update

Inching Higher After Quiet Night

• U.S. Treasuries are on track for a modestly higher start after yesterday's bounce off morning lows. Treasury futures spent the bulk of the night in a sideways range, inching to highs at the start of the European session. The modest gains have taken place alongside slight strength in other sovereign debt while global equity markets have been generally subdued. President Trump met with Japan's Emperor Naruhito and Prime Minister Takaichi, touting the start of a new golden age for the U.S.-Japan alliance. The market was scheduled to receive three domestic economic reports today, but some of them will not be released due to the ongoing shutdown. Later in the day, the U.S. Treasury will cap this week's note auction slate with a sale of $44 bln in 7-yr notes. Crude oil is under pressure while the U.S. Dollar Index is down 0.1% at 98.72.
• Yield Check:
  • 2-yr: -1 bp to 3.49%
  • 3-yr: -1 bp to 3.50%
  • 5-yr: UNCH at 3.61%
  • 10-yr: -1 bp to 3.99%
  • 30-yr: -1 bp to 4.56%

• News:
  • Press reports from Japan suggest that about ten companies have expressed interest in about $400 bln worth of investment projects in the U.S.
  • Reserve Bank of Australia Governor Bullock said that current RBA policy remains a bit restrictive.
  • The European Central Bank's Q3 lending survey showed slight tightening in overall credit standards.
  • The French government paved the way for higher corporate taxes on large companies.
  • Japan's September BoJ Core CPI rose to 2.1% yr/yr from 2.0%, as expected.
  • South Korea's flash Q3 expanded GDP 1.2% qtr/qtr (last 0.7%), growing 1.7% yr/yr (expected 0.9%; last 0.6%). October Consumer Confidence fell to 109.8 from 110.1.
  • Germany's November GfK Consumer Climate fell to -24.1 from -22.5 (expected -22.0).
  • Italy's October Business Confidence rose to 88.3 from 87.4 (expected 87.5) and Consumer Confidence rose to 97.6 from 96.8.
• Commodities:
  • WTI Crude: -1.5% to $60.39/bbl
  • Gold: -1.9% to $3942.80/ozt
  • Copper: -0.7% to $5.137/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1658
  • GBP/USD: -0.2% to 1.3306
  • USD/CNH: -0.1% to 7.0978
  • USD/JPY: -0.5% to 152.05
• Data out Today:
  • 9:00 ET: August FHFA Housing Price Index (Briefing.com consensus 0.1%; prior -0.1%) and August S&P Case-Shiller Home Price Index (Briefing.com consensus 1.9%; prior 1.8%)
  • 10:00 ET: October Consumer Confidence (Briefing.com consensus 94.2; prior 94.2)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results