Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a modestly higher start with the long bond expected to show early relative strength after outperforming yesterday. Treasury futures began inching higher in early evening action, continuing their advance as the night went on. The gains have coincided with a rise in other sovereign debt while global equity markets have been subdued. President Trump spoke last night, saying that it would be smart for Venezuela's President Maduro to step down. President Trump also announced the planned construction of a new class of warships and repeated that Greenland would be an essential national security asset to the U.S. Overnight action featured a moderate batch of data while the U.S. session will see several reports, headlined by the advance reading of Q3 GDP (Briefing.com consensus 3.0%; prior 3.8%) at 8:30 ET. Crude oil is little changed near $58/bbl while the U.S. Dollar Index is down 0.4% at 97.89.
• Yield Check:
  • 2-yr: -2 bps to 3.49%
  • 3-yr: -2 bps to 3.54%
  • 5-yr: -2 bps to 3.70%
  • 10-yr: -2 bps to 4.15%
  • 30-yr: -2 bps to 4.82%

• News:
  • Markets in Germany, Switzerland, and Italy will be closed entirely tomorrow while markets in the U.K., Spain, and France will close early.
  • European Central Bank policymaker Schnabel said that a rate hike should not be expected any time soon, echoing recent comments from other policymakers.
  • A spokesperson from the Russian government said that the recent talks in Florida about ending the war in Ukraine should not be seen as a breakthrough.
  • Japan's October BoJ Core CPI was up 2.2% yr/yr, as expected (last 2.2%).
  • Singapore's November CPI was up 0.3% m/m (last 0.0%), rising 1.2% yr/yr (expected 1.3%; last 1.2%). November Core CPI was up 1.2% yr/yr, as expected (last 1.2%).
  • Germany's November Import Price Index was up 0.5% m/m (expected 0.2%; last 0.2%) but down 1.9% yr/yr (last -1.4%).
  • Italy's November non-EU trade surplus reached EUR6.92 bln (last surplus of EUR5.32 bln).
  • Spain's November PPI was down 2.5% yr/yr (last 0.8%). Q3 GDP expanded 0.6% qtr/qtr, as expected (last 0.7%), growing 2.8% yr/yr, as expected (last 2.9%).
  • Swiss December ZEW Expectations fell to 6.2 from 12.2.
• Commodities:
  • WTI Crude: +0.2% to $58.12/bbl
  • Gold: +1.1% to $4518.50/ozt
  • Copper: +1.0% to $5.563/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1789
  • GBP/USD: +0.3% to 1.3503
  • USD/CNH: -0.2% to 7.0152
  • USD/JPY: -0.7% to 155.99
• Data out Today:
  • 8:30 ET: Advance Q3 GDP (Briefing.com consensus 3.0%; prior 3.8%), advance Q3 GDP Deflator (Briefing.com consensus 2.7%; prior 2.1%), October Durable Orders (Briefing.com consensus 0.3%; prior 0.5%), and Durable Orders ex-transport (Briefing.com consensus -1.1%; prior 0.6%)
  • 9:15 ET: November Industrial Production (Briefing.com consensus 0.1%; prior NA) and Capacity Utilization (Briefing.com consensus 77.4%; prior NA)
  • 10:00 ET: December Consumer Confidence (Briefing.com consensus 89.0; prior 88.7)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results