Bond Market Update

Pulling Back From Midweek Rally

• U.S. Treasuries are on track for a lower start after a couple days of solid gains across the curve. Treasury futures spent the early portion of the night in a sideways range, slipping to lows alongside other sovereign debt once the focus shifted to action in Europe. The market received a sizable batch of economic data since yesterday afternoon. China reported a rebound in new loan growth for November and party officials have hinted at additional fiscal and monetary easing in the near future. The U.K.'s GDP contracted slightly in October (-0.1%), putting the Q4 reading at risk of a contraction ahead of next week's policy meeting at the Bank of England that is likely to result in a rate cut. The market also received final November CPI readings from Germany, France, and Spain, but there were no significant surprises. The data reporting will come to a halt during the U.S. session with no domestic releases on today's calendar. Crude oil hovers just above $57.50/bbl while the U.S. Dollar Index is up 0.2% at 98.49.
• Yield Check:
  • 2-yr: +1 bp to 3.54%
  • 3-yr: +2 bps to 3.59%
  • 5-yr: +2 bps to 3.74%
  • 10-yr: +4 bps to 4.18%
  • 30-yr: +4 bps to 4.83%

• News:
  • China held its Central Economic Work Conference with officials pledging a continuation of fiscal expansion and more interest rate and reserve requirement ratio cuts.
  • Banko Sentral ng Pilipinas lowered its policy rate by 25 basis points to 4.50%, as expected.
  • The EU will freeze Russian central bank assets held in Europe indefinitely and could use a large portion to fund a loan for Ukraine.
  • China's November New Loans reached CNY390.0 bln (last CNY220.0 bln), November Outstanding Loans grew 6.4% yr/yr (last 6.5%), and total social financing reached CNY2.49 trln (last CNY810.0 bln).
  • Japan's October Industrial Production rose 1.5% m/m (expected 1.4%; last 2.6%) and Capacity Utilization increased 3.3% m/m (last 2.5%).
  • South Korea's November Import Price Index was up 2.2% yr/yr (last 0.5%), rising 7.0% yr/yr (last 4.8%).
  • India's November CPI was up 0.71% yr/yr (expected 0.70%; last 0.25%).
  • New Zealand's November Business PMI hit 51.4 (last 51.2). November Electronic Card Retail Sales rose 1.2% m/m (last 0.2%), increasing 1.6% yr/yr (last 0.8%).
  • Germany's November CPI was down 0.2% m/m, as expected (last 0.3%) but up 2.3% yr/yr, as expected (last 2.3%).
  • U.K.'s October GDP contracted 0.1% m/m (expected 0.1%; last -0.1%) but was up 1.1% yr/yr (expected 1.4%; last 1.1%). October Construction Output was down 0.6% m/m (expected -0.1%; last 0.2%) but up 0.9% yr/yr (expected 1.6%; last 1.3%). October Industrial Production rose 1.1% m/m (expected 0.9%; last -2.0%) but was down 0.8% yr/yr (expected -1.2%; last -2.5%). October Manufacturing Production rose 0.5% m/m (expected 1.1%: last -1.7%) but was down 0.8% yr/yr (expected -0.1%; last -2.2%). October trade deficit reached GBP22.54 bln (expected deficit of GBP19.10 bln; last deficit of GBP18.88 bln).
  • France's November CPI was down 0.2% m/m (expected -0.1%; last 0.1%) but up 0.9% yr/yr, as expected (last 0.9%).
  • Spain's November CPI was up 0.2% m/m, as expected (last 0.7%), rising 3.0% yr/yr, as expected (last 3.1%). November Core CPI was up 2.6% yr/yr, as expected (last 2.5%).
• Commodities:
  • WTI Crude: UNCH at $57.61/bbl
  • Gold: +1.2% to $4365.90/ozt
  • Copper: -0.7% to $5.46/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1722
  • GBP/USD: -0.1% to 1.3368
  • USD/CNH: UNCH at 7.0526
  • USD/JPY: +0.3% to 156.09
• No Data on Today's Schedule