Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a modestly higher start with shorter tenors expected to show some early relative strength after lagging yesterday. Treasury futures faced some overnight weakness near the end of the Asian session, but the losses were erased over the past five hours, lifting action back to overnight highs. Most other sovereign debt has also advanced while JGBs have bucked the trend, keeping Japanese yields near their highest levels of the year. Economic data released overnight included an eight-year high in South Korea's Consumer Confidence while the U.S. session will feature delayed September PPI (Briefing.com consensus 0.3%; prior -0.1%) and Retail Sales (Briefing.com consensus 0.4%; prior 0.6%) reports at 8:30 ET, followed by November Consumer Confidence (Briefing.com consensus 93.3; prior 94.6). The U.S. Treasury will follow yesterday's solid sale of 2-yr notes with a $70 bln 5-yr note offering at 13:00 ET. Crude oil is falling toward its October low in the $56/bbl area while the U.S. Dollar Index is down 0.1% at 100.02.
• Yield Check:
  • 2-yr: -2 bps to 3.49%
  • 3-yr: UNCH at 3.49%
  • 5-yr: -1 bp to 3.60%
  • 10-yr: -2 bps to 4.02%
  • 30-yr: -1 bp to 4.67%

• News:
  • Japan's Prime Minister Takaichi held an unexpected phone call with President Trump to discuss diplomatic relations with China.
  • South Korea's ruling party is expected to present the US Investment Act to the National Assembly this week.
  • South Korea's November Consumer Confidence rose to 112.4 from 109.8.
  • Hong Kong's October trade deficit reached HKD39.9 bln (last deficit of HKD50.2 bln) as imports rose 18.3% m/m (last 13.6%) and exports increased 17.5% m/m (last 16.1%).
  • Germany's Q3 GDP was unchanged qtr/qtr, as expected (last -0.2%), expanding 0.3% yr/yr, as expected (last 0.3%).
  • U.K.'s November CBI Distributive Trades Survey fell to -32 from -27 (expected -29).
  • France's November Consumer Confidence fell to 89 from 90.
  • Spain's October PPI was up 0.7% yr/yr (last 0.3%).
• Commodities:
  • WTI Crude: -2.0% to $57.67/bbl
  • Gold: +0.5% to $4114.10/ozt
  • Copper: +1.8% to $5.055/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1545
  • GBP/USD: +0.2% to 1.3136
  • USD/CNH: -0.3% to 7.0840
  • USD/JPY: -0.3% to 156.32
• Data out Today:
  • 8:30 ET: September PPI (Briefing.com consensus 0.3%; prior -0.1%), Core PPI (Briefing.com consensus 0.2%; prior -0.1%), September Retail Sales (Briefing.com consensus 0.4%; prior 0.6%), and Retail Sales ex-auto (Briefing.com consensus 0.3%; prior 0.7%)
  • 9:00 ET: September FHFA Housing Price Index (Briefing.com consensus 0.3%; prior 0.4%) and September S&P Case-Shiller Home Price Index (Briefing.com consensus 1.6%; prior 1.6%)
  • 10:00 ET: November Consumer Confidence (Briefing.com consensus 93.3; prior 94.6) and October Pending Home Sales (Briefing.com consensus 0.0%; prior 0.0%)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results