Bond Market Update

Inching Lower

• U.S. Treasuries are on track for a slightly lower start after another quiet night in the futures market. Treasury futures inched above yesterday's closing levels in early evening trade, before dipping from highs and nestling into a sideways range that was violated to the downside a few minutes ago. Other sovereign debt has also faced some light pressure while Asian equity markets saw limited movement, followed by some gains during the European session. Commodities are rebounding from yesterday's heavy selling while China's offshore yuan reached its strongest level against the dollar in 15 months. Economic data released overnight included a weak November Retail Sales report from South Korea (-3.3% m/m; prior 3.6%) and a strong Retail Sales report from Spain (6.0% yr/yr; prior 3.9%). The U.S. session will also feature a handful of reports, including the Chicago PMI for December (Briefing.com consensus 40.4; prior 36.3). Crude oil is on the rise while the U.S. Dollar Index is little changed at 98.08.
• Yield Check:
  • 2-yr: +1 bp to 3.47%
  • 3-yr: +1 bp to 3.52%
  • 5-yr: +1 bp to 3.69%
  • 10-yr: +2 bps to 4.14%
  • 30-yr: +1 bp to 4.82%

• News:
  • Markets in Japan, South Korea, Germany, Switzerland, and Italy will be closed entirely tomorrow while markets in Australia, New Zealand, Hong Kong, France, Spain, and the U.K. will close early.
  • Samsung and SK Hynix received U.S. approval to ship chip fabrication tools to China and there were reports that the U.S. may implement an annual system for granting these licenses.
  • South Korea's finance ministry is expected to present a roadmap for the country's inclusion in the MSCI Developed Market Index early next year.
  • Sweden's Riksbank noted in its Minutes from the December meeting that policy should remain at its current level for some time, echoing the European Central Bank's view.
  • South Korea's November Industrial Production was up 0.6% m/m (expected 2.2%; last -4.2%) but down 1.4% yr/yr (expected 3.0%; last -8.2%). November Retail Sales fell 3.3% m/m (last 3.6%) and November Service Sector Output was up 0.7% m/m (last -0.7%).
  • Spain's December CPI was up 0.3% m/m (last 0.2%), rising 2.9% yr/yr (expected 2.8%; last 3.0%). December Core CPI was up 2.6% yr/yr (last 2.6%). November Retail Sales rose 6.0% yr/yr (last 3.9%) and October Current Account surplus reached EUR7.18 bln (last surplus of EUR1.87 bln).
  • Swiss December KOF Leading Indicators rose to 103.4 from 101.7 (expected 101.5).
• Commodities:
  • WTI Crude: +0.4% to $58.30/bbl
  • Gold: +1.6% to $4413.20/ozt
  • Copper: +2.6% to $5.713/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1761
  • GBP/USD: -0.1% to 1.3496
  • USD/CNH: -0.1% to 6.9890
  • USD/JPY: -0.1% to 155.95
• Data out Today:
  • 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: October Job Openings (prior 7.227 mln)