Bond Market Update

 On the Rise

• U.S. Treasuries are on track for a higher start with the belly expected to show some relative strength in the early going. Treasury futures spent the first half of the night in a narrow sideways range, rising to highs once the focus shifted to action in Europe. The modest strength in Treasury futures has been accompanied by gains in other sovereign debt while global equity markets have seen a continuation of this week's volatility. Overnight, Japan's cabinet approved its largest stimulus package since the coronavirus pandemic and investors received flash Manufacturing and Services PMI readings from major economies. Japan's Manufacturing PMI (48.8) remained in contraction while eurozone's Manufacturing PMI (49.7) dipped back into contraction and Services PMI (53.1) showed a slight uptick in the pace of growth. PMI readings for the U.S. will also be released this morning. Crude oil is falling past $59/bbl while the U.S. Dollar Index is flat at 100.19.
• Yield Check:
  • 2-yr: -5 bps to 3.51%
  • 3-yr: -5 bps to 3.50%
  • 5-yr: -5 bps to 3.62%
  • 10-yr: -5 bps to 4.06%
  • 30-yr: -2 bps to 4.71%

• News:
  • New York Fed President (FOMC voter) Williams said that he sees more room for adjusting policy.
  • Japan's cabinet office approved an JPY21.3 trln stimulus package, which had been expected. It is expected to boost economic growth by nearly 1.5% per year. However, JGB issuance in 2026 is expected to be down compared to 2025.
  • South Korea's exports for the first 20 days of November were up 8.2% year-over-year with chip exports rising 26.5%.
  • China's October FDI was down 10.3% YTD (last -10.4%).
  • Japan's October National CPI was up 0.4% m/m (last 0.1%), rising 3.0% yr/yr (last 2.9%). October National Core CPI was up 3.0% yr/yr, as expected (last 2.9%). October trade balance reached JPY0 trln (expected deficit of JPY130 bln; last deficit of JPY300 bln) as imports grew 0.7% yr/yr (expected -0.7%; last 3.0%) and exports rose 3.6% yr/yr (expected 1.1%; last 4.2%). Flash November Manufacturing PMI hit 48.8, as expected (last 48.2) and flash Services PMI hit 53.1 (last 53.1).
  • South Korea's October PPI was up 0.2% m/m (last 0.4%), rising 1.5% yr/yr (last 1.2%).
  • Singapore's Q3 GDP expanded 2.4% qtr/qtr (expected 1.3%; last 1.7%), growing 4.2% yr/yr (expected 2.9%; last 4.7%).
  • India's November flash Manufacturing PMI hit 57.4 (expected 59.0; last 59.2) and flash Services PMI hit 59.5 (expected 59.7; last 58.9). 
  • Australia's flash November Manufacturing PMI hit 51.6 (last 49.7) and flash Services PMI hit 52.7 (last 52.5).
  • New Zealand's October trade deficit reached NZD1.54 bln (expected deficit of NZD955 mln; last deficit of NZD1.384 bln). October Credit Card Spending was up 1.4% yr/yr (last 0.3%).
  • Eurozone's flash November Manufacturing PMI hit 49.7 (expected 50.1; last 50.0) and flash Services PMI hit 53.1 (expected 52.8; last 53.0).
  • Germany's flash November Manufacturing PMI hit 48.4 (expected 49.8; last 49.6) and flash Services PMI hit 52.7 (expected 54.0; last 54.6).
  • U.K.'s October Retail Sales were down 1.1% m/m (expected -0.1%; last 0.7%) but up 0.2% yr/yr (expected 1.5%; last 1.0%). October Core Retail Sales were down 1.0% m/m (expected -0.2%; last 0.7%) but up 1.2% yr/yr (expected 2.5%; last 1.7%). October Public Sector Net Borrowing reached GBP17.43 bln (expected GBP15.20 bln; last GBP19.89 bln). Flash November Manufacturing PMI hit 50.2 (expected 49.3; last 49.7) and flash Services PMI hit 50.5 (expected 51.9; last 52.3) 
  • France's November Business Survey fell to 98 from 101 (expected 100). Flash November Manufacturing PMI hit 47.8 (expected 49.0; last 48.8) and flash Services PMI hit 50.8 (expected 48.4; last 48.0).
• Commodities:
  • WTI Crude: -0.9% to $58.50/bbl
  • Gold: +0.1% to $4062.70/ozt
  • Copper: +0.1% to $4.975/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1520
  • GBP/USD: +0.1% to 1.3085
  • USD/CNH: -0.1% to 7.1119
  • USD/JPY: -0.5% to 156.75
• Data out Today:
  • 9:45 ET: Flash November S&P Global U.S. Manufacturing PMI (prior 52.5) and flash November S&P Global U.S. Services PMI (prior 54.8)
  • 10:00 ET: Final November University of Michigan Consumer Sentiment (Briefing.com consensus 50.3; prior 50.3)