Bond Market Update

Long End Offers Early Lead

• U.S. Treasuries are on track for a modestly higher start in longer tenors while the short end is on course for a flat open. Treasury futures held their ground through the bulk of the night amid reduced volume owed to a holiday in Japan. The market followed its sideways start with a rise to highs during the early portion of the European session. The advance in Treasury futures took place alongside slight gains in other sovereign debt while global equity markets have shown some strength. Economic data released overnight included another disappointing sentiment survey from Germany, as the ifo Business Climate Index dipped to 88.1 from 88.4 against expectations for a slight increase. The U.S. session will not include any economic data but the U.S. Treasury will sell $69 bln in 2-yr notes at 13:00 ET. Crude oil is little changed near $58/bbl while the U.S. Dollar Index is down 0.1% at 100.06.
• Yield Check:
  • 2-yr: UNCH at 3.51%
  • 3-yr: UNCH at 3.50%
  • 5-yr: -1 bp to 3.61%
  • 10-yr: -2 bps to 4.04%
  • 30-yr: -4 bps to 4.68%

• News:
  • The Reserve Bank of New Zealand will meet on Wednesday and the NZIER Shadow Board supports a 25-basis point rate cut.
  • South Korea and Taiwan are reportedly making a joint push to influence the Trump administration to lower tariffs on chip imports from both nations.
  • New Bank of Japan policymaker Kazuyauki Masu spoke in favor of a rate hike but did not specify his preferred timing.
  • Singapore's October CPI was unchanged m/m (last 0.4%), rising 1.2% yr/yr (last 0.7%). October Core CPI was up 1.2% yr/yr (last 0.4%).
  • Germany's November ifo Business Climate Index fell to 88.1 from 88.4 (expected 88.6). November Current Assessment rose to 85.6 from 85.3 (expected 85.5) and Business Expectations fell to 90.6 from 91.6 (expected 91.4).
  • Swiss Q3 Employment Level remained at 5.532 mln.
• Commodities:
  • WTI Crude: UNCH at $58.07/bbl
  • Gold: -0.2% to $4072.20/ozt
  • Copper: -0.4% to $4.993/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1548
  • GBP/USD: +0.2% to 1.3113
  • USD/CNH: UNCH at 7.1035
  • USD/JPY: +0.3% to 156.80
• No Data on Today's Schedule
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results