Bond Market Update

Higher Start Ahead

• U.S. Treasuries are on track for a modestly higher start to the final session of 2025 after inching higher during a quiet overnight session. The final trading day of the year was expected to get off to a slow start, given a rash of holiday closures and a handful of early closes. Equity markets in general had a banner showing in 2025 with South Korea's Kospi soaring more than 75.0%. In Europe, the STOXX Europe 600 index has gained 16.7% this year while Spain's IBEX has surged almost 50.0%. Treasury futures held their ground during the Asian session, which featured the release of expansionary PMI readings from China, making for a positive surprise. The U.S. session will see the release of the latest Initial Claims report (Briefing.com consensus 226,000; prior 214,000) at 8:30 ET and the Treasury market will close at 14:00 ET. Crude oil is on the rise while the U.S. Dollar Index is flat at 98.22.
• Yield Check:
  • 2-yr: -1 bp to 3.44%
  • 3-yr: -1 bp to 3.50%
  • 5-yr: -1 bp to 3.67%
  • 10-yr: -2 bps to 4.11%
  • 30-yr: -1 bp to 4.80%

• News:
  • The Chinese government plans to continue issuing trade-in subsidies for auto purchases in 2026 and will expand the program to include digital and smart products.
  • China Securities Journal reported that domestic banks will slash business loan rates below 3.0%.
  • China's December Manufacturing PMI hit 50.1 (expected 49.2; last 49.2) and Non-Manufacturing PMI hit 50.2 (expected 49.6; last 49.5). December RatingDog Manufacturing PMI hit 50.1 (expected 49.8; last 49.9).
  • South Korea's December CPI was up 0.3% m/m (expected 0.2%; last -0.2%), rising 2.3% yr/yr, as expected (last 2.4%).
  • Hong Kong's November M3 Money Supply increased 4.5% yr/yr (last 3.5%).
  • Singapore's November Bank Lending reached SGD873.1 bln (last SGD866.1 bln).
  • Swiss November Official Reserve Assets reached CHF852.4 bln (last CHF844.9 bln).
• Commodities:
  • WTI Crude: +0.5% to $58.21/bbl
  • Gold: -1.3% to $4328.40/ozt
  • Copper: -1.8% to $5.676/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1759
  • GBP/USD: UNCH at 1.3467
  • USD/CNH: -0.2% to 6.9784
  • USD/JPY: +0.1% to 156.60
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 226,000; prior 214,000) and Continuing Claims (prior 1.923 mln)
  • 10:30 ET: Weekly crude oil inventories (prior 0.4 mln)
  • 12:00 ET: Weekly natural gas inventories (prior -166 bcf)