Bond Market Update

Inching Lower After Quiet Night

• U.S. Treasuries are on track for a slightly lower start after a quiet night in the futures market. Treasury futures climbed in early evening trade, but the modest gains faded slowly as the night went on, leaving futures on their lows leading into the cash start. Overnight action featured gains in most global equity markets while sovereign debt has seen limited movement. Expectations for a December rate hike from the Bank of Japan remained in place despite the release of an unexpectedly weak Household Spending report for October, with the market also speculating that more hikes will follow next year. Economic data released overnight included slightly better-than-expected eurozone growth and employment figures for Q3 while the U.S. session will see the release of the delayed Personal Income/Outlays report for September. Crude oil holds a slim loss while the U.S. Dollar Index is little changed at 99.01.
• Yield Check:
  • 2-yr: +1 bp to 3.54%
  • 3-yr: +1 bp to 3.56%
  • 5-yr: +1 bp to 3.69%
  • 10-yr: +1 bp to 4.12%
  • 30-yr: UNCH at 4.77%

• News:
  • The Reserve Bank of India left its policy rate at 5.25%, as expected.
  • There was press speculation that a December hike from the Bank of Japan could be followed by more rate hikes next year.
  • State-owned banks in China are reportedly purchasing dollars at their fastest pace in 14 months to counter recent yuan strength.
  • French President Macron said that he is looking to eliminate trade restrictions between France and China.
  • German Chancellor Merz is struggling to convince his coalition members to support a pension bill that has faced heavy opposition.
  • Eurozone's Q3 GDP expanded 0.3% qtr/qtr (expected 0.2%; last 0.1%), growing 1.4% yr/yr, as expected (last 1.5%). Q3 Employment increased by 0.2% qtr/qtr (expected 0.1%; last 0.1%), rising 0.6% yr/yr (expected 0.5%; last 0.7%).
  • Germany's October Factory Orders rose 1.5% m/m (expected 0.3%; last 2.0%).
  • U.K.'s November Halifax House Price Index was unchanged m/m (expected 0.2%; last 0.5%), rising 0.7% yr/yr (last 1.9%).
  • France's October Industrial Production was up 0.2% m/m (expected -0.1%; last 0.7%). October trade deficit reached EUR3.9 bln (expected deficit of EUR6.8 bln; last deficit of EUR6.4 bln). October Current Account surplus reached EUR1.10 bln (last deficit of EUR1.60 bln)
  • Italy's October Retail Sales rose 0.5% m/m (expected 0.4%; last -0.4%), increasing 1.3% yr/yr (last 0.7%).
  • Spain's October Industrial Production was up 1.2% yr/yr (last 1.5%).
  • Japan's October Household Spending was down 3.5% m/m (expected 0.7%; last -0.7%), falling 3.0% yr/yr (expected 1.1%; last 1.8%). October Leading Index rose to 110.0 from 108.6 (expected 109.3) and Coincident Indicator was up 0.5% m/m (expected 1.8%; last 1.7%).
  • South Korea's October Current Account surplus reached $6.81 bln (last surplus of $13.47 bln).
  • Singapore's October Retail Sales rose 2.3% m/m (last -1.7%), increasing 4.5% yr/yr (last 2.7%).
• Commodities:
  • WTI Crude: -0.2% to $59.56/bbl
  • Gold: +0.3% to $4255.80/ozt
  • Copper: +1.4% to $5.448/lb
• Currencies:
  • EUR/USD: UNCH at 1.1647
  • GBP/USD: +0.1% to 1.3344
  • USD/CNH: UNCH at 7.0690
  • USD/JPY: +0.1% to 155.19
• Data out Today:
  • 10:00 ET: September Personal Income (Briefing.com consensus 0.4%; prior 0.4%), Personal Spending (Briefing.com consensus 0.4%; prior 0.6%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), Core PCE Prices (Briefing.com consensus 0.3%; prior 0.2%), October Factory Orders (Briefing.com consensus -0.3%), and preliminary December University of Michigan Consumer Sentiment (Briefing.com consensus 52.0; prior 51.0)
  • 15:00 ET: October Consumer Credit (Briefing.com consensus $9.8 bln; prior $13.1 bln)