Bond Market Update

Higher Start Ahead

• U.S. Treasuries are on track for a higher start after last week's mixed showing that featured a modest gain in the 2-yr note and losses in most remaining tenors. Treasury futures spent the overnight session in a steady rise that began in early evening action and produced highs not long ago. The advance in Treasury futures has coincided with modest gains in other sovereign debt while equity markets have been mixed. China reported weak growth figures for November, contributing to the soft sentiment. Economic data during the U.S. session will be limited ot the 8:30 ET release of December Empire State Manufacturing (Briefing.com consensus 10.6; prior 18.7), followed by the December NAHB Housing Market Index (Briefing.com consensus 39; prior 38) at 10:00 ET. Crude oil is sliding toward $57/bbl while the U.S. Dollar Index is down 0.2% at 98.23.
• Yield Check:
  • 2-yr: -2 bps to 3.51%
  • 3-yr: -3 bps to 3.56%
  • 5-yr: -3 bps to 3.72%
  • 10-yr: -3 bps to 4.16%
  • 30-yr: -4 bps to 4.82%

• News:
  • President Trump said that his search for the next Fed Chairman nominee is down to Kevin Hassett and Kevin Warsh.
  • Reserve Bank of New Zealand Governor Breman said that financial conditions have tightened more than expected since the central bank's November meeting.
  • Switzerland's SECO raised its domestic growth forecast for 2026 to 1.1% from 0.9% while the CPI outlook for 2026 was lowered to 0.2% from 0.5%. Meanwhile, KOF also raised its domestic growth forecast for 2026 to 1.1% from 0.9% while the CPI outlook was cut to 0.3% from 0.5%.
  • China's November Industrial Production was up 4.8% yr/yr (expected 5.0%; last 4.9%), November Retail Sales rose 1.3% yr/yr (expected 3.0%; last 2.9%), and November Fixed Asset Investment fell 2.6% yr/yr (expected -2.4%; last -1.7%). November Unemployment Rate remained at 5.1%, as expected, and November House Prices fell 2.4% yr/yr (last -2.2%).
  • Japan's Q4 Tankan Large Manufacturers Index hit 15, as expected (last 14), and Large Non-Manufacturers Index remained at 28, as expected. Tankan All Big Industry Capex was up 12.6% (expected 12.0%; last 12.5%). Tankan Q4 Small Manufacturing Index rose to 6 from 1 (expected 2). October Tertiary Industry Activity Index was down 0.70 (last 4.70).
  • South Korea's November trade surplus reached $9.74 bln (last surplus of $9.74 bln) as imports rose 1.1% yr/yr (last 1.2%) and exports grew 8.4% yr/yr (last 8.4%).
  • India's November trade deficit reached $24.53 bln (last deficit of $41.68 bln). November WPI Inflation was down 0.32% yr/yr (expected -0.60%; last -1.21%).
  • Hong Kong's Q3 PPI was up 7.7% (last 4.0%).
  • New Zealand's November Performance of Services Index fell to 46.9 from 48.4.
  • Eurozone's October Industrial Production was up 0.8% m/m (last 0.2%), rising 2.0% yr/yr (last 1.2%).
  • Germany's November WPI was up 0.3% m/m (last 0.3%), rising 1.5% yr/yr (last 1.1%).
  • Swiss November PPI was down 0.5% m/m (last -0.3%), falling 1.6% yr/yr (last -1.7%).
• Commodities:
  • WTI Crude: -0.5% to $57.13/bbl
  • Gold: +1.2% to $4379.70/ozt
  • Copper: +1.6% to $5.44/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1759
  • GBP/USD: +0.2% to 1.3393
  • USD/CNH: -0.2% to 7.0406
  • USD/JPY: -0.5% to 154.98
• Data out Today:
  • 8:30 ET: December Empire State Manufacturing (Briefing.com consensus 10.6; prior 18.7)
  • 10:00 ET: December NAHB Housing Market Index (Briefing.com consensus 39; prior 38)