Bond Market Update

Short End Inches Higher

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market. Treasury futures faced some light pressure through the bulk of the overnight session, but the slim losses were erased during the past two hours, lifting shorter tenors into positive territory. The limited movement took place alongside some more weakness in global equity markets and slight losses in sovereign debt. Economic data released overnight included smaller-than-expected trade surplus readings from China ($90.07 bln; expected $96.90 bln) and Germany (EUR15.3 bln; expected EUR16.7 bln) with China's reading pressured by weak imports and exports while Germany saw strong import growth that reduced the overall surplus. U.S. investors were scheduled to receive the Employment Situation report for October this morning, but that report will not come out due to the ongoing shutdown. The market will receive the preliminary November University of Michigan Consumer Sentiment Index (Briefing.com consensus 54.0; prior 53.6) at 10:00 ET. Crude oil is on the rise while the U.S. Dollar Index is down 0.1% at 99.67.
• Yield Check:
  • 2-yr: -2 bps to 3.55%
  • 3-yr: -2 bps to 3.56%
  • 5-yr: -1 bp to 3.68%
  • 10-yr: UNCH at 4.09%
  • 30-yr: UNCH at 4.69%

• News:
  • Japan's Financial Services Agency will support joint issuance of a stablecoin by three major banks.
  • The Dutch government will give up control of Chinese chipmaker Nexperia if China restarts exports of some chips, according to Bloomberg.
  • China's October trade surplus reached $90.07 bln (expected surplus of $96.90 bln; last surplus of $90.45 bln) as imports rose 1.0% yr/yr (expected 3.2%; last 7.4%) and exports fell 1.1% yr/yr (expected 3.0%: last 8.3%). October Foreign Reserves reached $3.343 trln (expected $3.320 trln; last $3.339 trln).
  • Japan's September Household Spending was down 0.7% m/m (last 0.6%) but up 1.8% yr/yr (expected 2.5%; last 2.3%).
  • Germany's September trade surplus reached EUR15.3 bln (expected surplus of EUR16.7 bln; last surplus of EUR16.9 bln) as imports rose 3.1% m/m (expected 0.5%; last -1.4%) and exports grew 1.4% m/m (expected 0.5%; last -0.8%).
  • U.K.'s October Halifax House Price Index was up 0.6% m/m (expected 0.1%; last -0.3%), rising 1.9% yr/yr (expected 1.5%: last 1.3%).
  • France's September trade deficit reached EUR6.6 bln (expected deficit of EUR5.9 bln; last deficit of EUR5.2 bln). September Current Account deficit reached EUR1.60 bln (last surplus of EUR1.40 bln).
  • Swiss Q4 SECO Consumer Climate fell to -37 from -28 (expected -36).
• Commodities:
  • WTI Crude: +0.9% to $59.94/bbl
  • Gold: +0.4% to $4004.80/ozt
  • Copper: +0.4% to $4.986/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1557
  • GBP/USD: -0.2% to 1.3110
  • USD/CNH: +0.1% to 7.1241
  • USD/JPY: UNCH at 153.05
• Data out Today:
  • 8:30 ET: October Nonfarm Payrolls (DELAYED; prior NA), Nonfarm Private Payrolls (DELAYED; prior NA), Unemployment Rate (DELAYED; prior NA), Average Hourly Earnings (DELAYED; prior NA), and Average Workweek (DELAYED; prior NA)
  • 10:00 ET: Preliminary November University of Michigan Consumer Sentiment (Briefing.com consensus 54.0; prior 53.6)
  • 15:00 ET: September Consumer Credit (DELAYED; Briefing.com consensus $8.0 bln; prior NA)