Bond Market Update

Inching Lower After Quiet Night

• U.S. Treasuries are on track for a slightly lower start in longer tenors after a quiet night. Treasury futures inched lower in early evening trade, remaining just above their worst levels through the remainder of the night. The light selling in Treasuries has been accompanied by comparably light pressure on other sovereign debt while JGBs have underperformed, sending yields on most maturities to fresh highs for the year while the yen inched up off this year's low against the dollar. Overnight action saw renewed strength in chip names in Asia while the overall news flow has been on the subdued side. U.S. officials met with representatives from Ukraine and Russia in Florida over the weekend, but a breakthrough has remained elusive. The market will not receive any data today but the U.S. Treasury will sell $69 bln in 2-yr notes. Crude oil is extending last week's rise off its lowest level of the year while the U.S. Dollar Index is down 0.2% at 98.45.
• Yield Check:
  • 2-yr: UNCH at 3.49%
  • 3-yr: +1 bp to 3.54%
  • 5-yr: +1 bp to 3.70%
  • 10-yr: +1 bp to 4.16%
  • 30-yr: +1 bp to 4.84%

• News:
  • The People's Bank of China made no changes to its one-year (3.00%) and five-year (3.50%) loan prime rates.
  • South Korea's exports through the first 20 days of December were up 6.8% yr/yr with chip exports jumping 41.8%.
  • Softbank reportedly aims to provide its $22.5 bln commitment to OpenAI by the end of the year.
  • A survey from Germany's ifo Institute showed that just over a quarter of German companies expect further deterioration of business in 2026.
  • European Central Bank policymaker Simkus said that growth has improved, but is still sluggish, and that inflation should stay near the 2.0% target in the medium term.
  • Hong Kong's November CPI was unchanged m/m (last 0.3%), rising 1.2% yr/yr (last 1.2%).
  • India's November Infrastructure Output was up 1.8% yr/yr (last 0.0%).
  • U.K.'s Q3 GDP expanded 0.1% qtr/qtr, as expected (last 0.3%), growing 1.3% yr/yr, as expected (last 1.4%). Q3 Business Investment was up 1.5% qtr/qtr (expected -0.3%; last -1.7%), rising 2.7% yr/yr (expected 0.7%; last 3.2%). Q3 Current Account deficit reached GBP12.1 bln (expected deficit of GBP19.1 bln; last deficit of GBP21.2 bln).
  • Italy's November PPI was up 1.0% m/m (last -0.2%) but down 0.2% yr/yr (last 0.1%).
• Commodities:
  • WTI Crude: +2.2% to $57.74/bbl
  • Gold: +1.3% to $4446.10/ozt
  • Copper: UNCH at $5.51/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1743
  • GBP/USD: +0.4% to 1.3433
  • USD/CNH: UNCH at 7.0326
  • USD/JPY: -0.2% to 157.36
• No Data on Today's Schedule
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results