Bond Market Update

Rising After Midweek Pause

• U.S. Treasuries are on track for a higher start after yesterday's Veterans Day closure. Treasury futures rallied on Tuesday morning, hanging onto their gains through the closure in the cash market. Futures began dipping slightly on Tuesday evening, but even with the overnight backtracking, issues in the belly remain well above levels seen on Monday afternoon while the long end underperforms, trading slightly higher. Overnight action featured a mostly positive showing from global equities while sovereign debt has seen limited movement. The data flow was on the light side and there will be no top-tier releases during the U.S. session. However, the U.S. Treasury will continue this week's note and bond auction slate with a $42 bln 10-yr note sale. Crude oil is slipping back below $61/bbl while the U.S. Dollar Index is up 0.1% at 99.56.
• Yield Check:
  • 2-yr: -4 bps to 3.55%
  • 3-yr: -5 bps to 3.55%
  • 5-yr: -4 bps to 3.67%
  • 10-yr: -3 bps to 4.08%
  • 30-yr: -2 bps to 4.68%

• News:
  • Taiwan and Vietnam are reportedly closing in on final trade deals with the U.S.
  • The People's Bank of China said in its Q3 monetary policy report that an appropriately loose stance will be maintained.
  • Reserve Bank of Australia Deputy Governor Hauser said that policy remains restrictive, but policymakers are on a lookout for changes in the environment.
  • The Bank of France expects only domestic growth in Q4 after a 0.5% increase in Q3.
  • Japan's November Reuters Tankan Index jumped to 17 from 8. October M2 Money Stock was up 1.6% yr/yr (expected 1.8%; last 1.5%) and October Machine Tool Orders rose 16.8% yr/yr (expected 9.9%; last 8.1%).
  • South Korea's October Unemployment Rate rose to 2.6% from 2.5%. September M2 Money Supply was up 7.2% yr/yr (last 6.8%).
  • India's October CPI was up 0.25% yr/yr (expected 0.48%; last 1.44%).
  • Australia's O3 Invest Housing Finance rose 17.6% qtr/qtr (expected 4.0%; last 2.6%) and Q3 Home Loans rose 4.7% qtr/qtr (expected 2.5%; last 2.2%).
  • Germany's October CPI was up 0.3% m/m, as expected (last 0.2%), rising 2.3% yr/yr, as expected (last 2.4%). October WPI was up 0.3% m/m (expected 0.1%; last 0.2%), rising 1.1% yr/yr (last 1.2%).
  • Italy's September Industrial Production was up 2.8% m/m (expected 1.5%; last -2.7%), rising 1.5% yr/yr (expected -0.5%; last -3.0%).
• Commodities:
  • WTI Crude: -1.0% to $60.45/bbl
  • Gold: +0.6% to $4142.40/ozt
  • Copper: +0.4% to $5.087/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1572
  • GBP/USD: -0.3% to 1.3113
  • USD/CNH: UNCH at 7.1194
  • USD/JPY: +0.5% to 154.81
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.6%; prior -1.9%)
• Treasury Auctions:
  • 13:00 ET: $42 bln 10-yr Treasury note auction results