Bond Market Update

Steady Into Delayed Data Storm

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market, though some early volatility is expected to surround the 8:30 ET release of a few economic reports, headlined by November Nonfarm Payrolls (Briefing.com consensus 30,000). Treasury futures spent the night in a sideways range, rising to highs toward the end of the Asian session, followed by a return to little changed. Like U.S. Treasuries, other sovereign debt has seen limited movement while equity markets have faced some pressure with technology names in Asia and military contractors in Europe among the weakest performers. Economic data released overnight showed continued expansion in Australia's Manufacturing PMI (52.2) while Japan's reading (49.7) remained in contraction. European flash December PMI readings remained generally weak with the eurozone's Manufacturing PMI (to 49.2 from 49.6) dipping further into contraction while Services PMI (52.6 from 53.6) pointed to ongoing expansion, but at a slower pace than last month. Crude oil is falling past $56/bbl while the U.S. Dollar Index is down 0.2% at 98.12.
• Yield Check:
  • 2-yr: -1 bp to 3.50%
  • 3-yr: -1 bp to 3.55%
  • 5-yr: -1 bp to 3.72%
  • 10-yr: -1 bp to 4.17%
  • 30-yr: -1 bp to 4.84%

• News:
  • National Australia Bank expects the Reserve Bank of Australia to announce 25-basis point rate hikes in February and May.
  • Japan's flash December Manufacturing PMI hit 49.7 (expected 49.0; last 48.7) and flash Services PMI hit 52.5 (last 53.2).
  • Hong Kong's November Unemployment Rate remained at 3.8%.
  • India's flash December Manufacturing PMI hit 55.7 (last 56.6) and flash Services PMI hit 59.1 (last 59.8).
  • Australia's flash December Manufacturing PMI hit 52.2 (last 51.6) and flash Services PMI hit 51.0 (last 52.8). December Westpac Consumer Sentiment was down 9.0% (last 12.8%).
  • New Zealand's November FPI was down 0.4% m/m (last -0.3%).
  • Eurozone's flash December Manufacturing PMI hit 49.2 (expected 49.9; last 49.6) and flash Services PMI hit 52.6 (expected 53.3; last 53.6). December ZEW Economic Sentiment hit 33.7 (expected 26.3; last 25.0). October trade surplus reached EUR18.4 bln (last surplus of EUR18.4 bln).
  • Germany's flash December Manufacturing PMI hit 47.7 (expected 48.6; last 48.2) and flash Services PMI hit 52.6 (expected 53.0; last 53.1). December ZEW Economic Sentiment rose to 45.8 from 38.5 (expected 38.4) and ZEW Current Conditions fell to -81.0 from -78.7 (expected -80.0).
  • U.K.'s flash December Manufacturing PMI hit 51.2 (expected 50.3; last 50.2) and flash Services PMI hit 52.1 (expected 51.6; last 51.3). October Average Earnings Index + Bonus rose 4.7% yr/yr (expected 4.4%; last 4.9%). October three-month employment decreased by 16,000 (last -22,000) and October Unemployment Rate rose to 5.1% from 5.0%, as expected. November Claimant Count increased by 20,100 (expected 21,600; last -3,900).
  • France's flash December Manufacturing PMI hit 50.6 (expected 48.1; last 47.8) and flash Services PMI hit 50.2 (expected 51.1; last 51.4).
  • Italy's November CPI was down 0.2% m/m, as expected (last -0.2%), rising 1.1% yr/yr (expected 1.2%; last 1.2%). October trade surplus reached EUR4.156 bln (expected surplus of EUR3.210 bln; last surplus of EUR2.968 bln).
• Commodities:
  • WTI Crude: -1.6% to $55.90/bbl
  • Gold: -0.3% to $4322.40/ozt
  • Copper: -0.8% to $5.368/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1773
  • GBP/USD: +0.5% to 1.3434
  • USD/CNH: -0.1% to 7.0351
  • USD/JPY: -0.4% to 154.61
• Data out Today:
  • 8:30 ET: November Nonfarm Payrolls (Briefing.com consensus 30,000; prior NA), Nonfarm Private Payrolls (Briefing.com consensus 34,000; prior NA), Unemployment Rate (Briefing.com consensus 4.4%; prior NA), Average Hourly Earnings (Briefing.com consensus 0.3%; prior NA), Average Workweek (Briefing.com consensus 34.3; prior NA), September Housing Starts (Briefing.com consensus 1.320 mln; prior 1.307 mln) and Building Permits (Briefing.com consensus 1.348 mln; prior 1.312 mln), October Retail Sales (Briefing.com consensus 0.3%; prior 0.2%) and Retail Sales ex-auto (Briefing.com consensus 0.3%; prior 0.3%)
  • 9:15 ET: November Industrial Production (Briefing.com consensus 0.1%; prior NA) and Capacity Utilization (Briefing.com consensus 77.4%; prior NA)
  • 9:45 ET: Flash December S&P Global U.S. Manufacturing PMI (prior 52.2) and flash December S&P Global U.S. Services PMI (prior 54.1)
  • 10:00 ET: September Business Inventories (Briefing.com consensus 0.1%; prior NA)