Bond Market Update

Looking to Sustain Tuesday Bounce

• U.S. Treasuries are on track for a modestly higher start, seeking to continue yesterday's rebound. Treasury futures inched higher in early evening action, maintaining their slim gains through the night. The market saw another wave of buying over the past 90 minutes, which sent all tenors past their overnight highs. The advance in Treasury futures has been accompanied by modest gains in other sovereign debt even though economic data released overnight included a series of above-consensus November Services PMI readings from major economies. The market will also receive the final November Services PMI (prior 54.8) reading for the U.S. at 9:45 ET, followed by November ISM Services (Briefing.com consensus 52.4%; prior 52.4%) at 10:00 ET. Separately, the November ADP Employment Change report (Briefing.com consensus 20,000; prior 42,000) will be released shortly. Crude oil is on the rise while the U.S. Dollar Index is down 0.4% at 98.96.
• Yield Check:
  • 2-yr: -3 bps to 3.49%
  • 3-yr: -3 bps to 3.50%
  • 5-yr: -3 bps to 3.63%
  • 10-yr: -3 bps to 4.06%
  • 30-yr: -1 bp to 4.73%

• News:
  • The Chinese government is reportedly looking for ways to boost demand for tourism and aviation.
  • Reserve Bank of Australia Governor Bullock said that inflation has surprised to the upside and the economy could be running ahead of potential.
  • The EU Council has agreed on a plan to end imports of Russian gas by 2027.
  • Germany's Economy Minister said that economic growth in 2026 and 2027 is possible if investments are made in infrastructure.
  • China's November RatingDog Services PMI hit 52.1, as expected (last 52.6).
  • Japan's November Services PMI hit 53.2 (expected 53.1; last 53.1).
  • South Korea's Q3 GDP expanded 1.3% qtr/qtr (expected 1.2%; last 0.7%), growing 1.8% yr/yr (expected 1.7%; last 0.6%).
  • India's November Services PMI hit 59.8 (expected 59.5; last 58.9).
  • Hong Kong's November Manufacturing PMI hit 52.9 (last 51.2).
  • Australia's Q3 GDP expanded 0.4% qtr/qtr (expected 0.7%; last 0.7%), growing 2.1% yr/yr (expected 2.2%; last 2.0%). November Services PMI hit 52.8 (expected 52.7; last 52.5).
  • Eurozone's November Services PMI hit 53.6 (expected 53.1; last 53.0). October PPI was up 0.1% m/m, as expected (last -0.1%) but down 0.5% yr/yr (expected -0.4%; last -0.2%).
  • Germany's November Services PMI hit 53.1 (expected 52.7; last 54.6).
  • U.K.'s November Services PMI hit 51.3 (expected 50.5; last 52.3).
  • France's November Services PMI hit 51.4 (expected 50.8; last 48.0).
  • Italy's November Services PMI hit 55.0 (expected 53.9; last 54.0).
  • Spain's November Services PMI hit 55.6 (expected 56.3; last 56.6).
  • Swiss November CPI was down 0.2% m/m (expected -0.1%; last -0.3%).
• Commodities:
  • WTI Crude: +1.2% to $59.38/bbl
  • Gold: +0.5% to $4241.70/ozt
  • Copper: +1.9% to $5.34/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1663
  • GBP/USD: +0.7% to 1.3299
  • USD/CNH: -0.1% to 7.0566
  • USD/JPY: -0.3% to 155.41
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.4%; prior 0.2%)
  • 8:15 ET: November ADP Employment Change (Briefing.com consensus 20,000; prior 42,000)
  • 8:30 ET: September Import Prices (prior 0.3%), Import Prices ex-oil (prior 0.4%), Export Prices (prior 0.3%), and Export Prices ex-agriculture (prior 0.3%)
  • 9:15 ET: September Industrial Production (Briefing.com consensus 0.1%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 77.3%; prior 77.4%)
  • 9:45 ET: Final November S&P Global U.S. Services PMI (prior 54.8)
  • 10:00 ET: November ISM Services (Briefing.com consensus 52.4%; prior 52.4%)
  • 10:30 ET: Weekly crude oil inventories (prior +2.77 mln)