Bond Market Update

Higher Start to Last Week of 2025

• U.S. Treasuries began the last week of December on a modestly higher, but generally sleepy, note. The market started the day with slim gains after an overnight session that was quiet even though several markets reopened after being closed for Christmas at the end of last week. International equity markets started the week in subdued fashion while sovereign debt advanced amid growing hopes for a conclusion to the Russia-Ukraine war. Commodities reversed from their strong finish to last week with silver (-$6.69 to $70.52/ozt) and palladium (-$330.30 to $1693.00/ozt) leading to the downside. Treasuries, however, spent the day in a narrow range near their starting levels. The long bond underperformed a bit, finishing closer to its low while shorter tenors ended closer to their starting levels with the 2-yr note settling above its opening mark. Crude oil reclaimed the bulk of its loss from Friday while the U.S. Dollar Index spent the day near its flat line (98.02).
• Yield Check:
  • 2-yr: -2 bps to 3.46%
  • 3-yr: -2 bps to 3.51%
  • 5-yr: -2 bps to 3.68%
  • 10-yr: -2 bps to 4.12%
  • 30-yr: -2 bps to 4.81%

• News:
  • The Bank of Japan's summary of opinions from the December meeting showed that some policymakers believe that steady rate hikes are needed to avoid falling behind the curve.
  • China's November Industrial Profit was up 0.1% YTD (last 1.9%).
  • Hong Kong's November trade deficit reached HKD48.5 bln (last deficit of HKD39.9 bln) as imports grew 18.1% m/m (last 18.3%) and exports rose 18.8% m/m (last 17.5%).
  • India's November Industrial Production was up 6.7% yr/yr (expected 2.5%; last 0.5%) and Manufacturing Output was up 8.0% m/m (last 2.0%).
  • France's November jobseeker total dipped to 3.129 mln from 3.151 mln.
• Today's Data:
  • Pending Home Sales rose 3.3% month-over-month in November (Briefing.com consensus 0.9%) after increasing a revised 2.4% (from 1.9%) in September.
  • Weekly natural gas inventories decreased by 166 bcf after decreasing by 167 bcf a week ago.
• Commodities:
  • WTI crude: +2.5% to $58.10/bbl
  • Gold: -4.5% to $4345.50/ozt
  • Copper: -4.8% to $5.57/lb
• Currencies:
  • EUR/USD: UNCH at 1.1768
  • GBP/USD: +0.1% to 1.3508
  • USD/CNH: -0.1% to 6.9980
  • USD/JPY: -0.4% to 156.01
• The Day Ahead:
  • 9:00 ET: October FHFA Housing Price Index (Briefing.com consensus 0.1%; prior 0.0%) and October S&P Case-Shiller Home Price Index (Briefing.com consensus 1.1%; prior 1.4%)
  • 9:45 ET: December Chicago PMI (Briefing.com consensus 40.4; prior 36.3)
  • 10:00 ET: December Consumer Confidence (prior 88.7) and October Job Openings (prior 7.227 mln)