Bond Market Update

Eye on Central Banks

• U.S. Treasuries saw yields across the curve creep higher in overnight trading, with market participants eyeing numerous central bank policy meetings in coming weeks. Wednesday's FOMC decision is the focal point. A "hawkish cut," whereby the FOMC agrees to a 25-basis-point cut but then suggests it may be some time until the next cut, is expected. There isn't any U.S. economic data of note today, although China posted better-than-expected trade data for November, while Japan saw a downward revision to Q3 GDP. Results from the $58 billion 3-yr note auction will be released at 1:00 p.m. ET.
• Yield Check:
  • 2-yr: +2 bps to 3.58%
  • 3-yr: +1 bp to 3.60%
  • 5-yr: +1 bp to 3.73%
  • 10-yr: unch at 4.14%
  • 30-yr: unch at 4.79%

• News:
  • Global markets are waiting on key central bank decisions this week (RBA, FOMC, SNB) and next week (BOE, ECB, and BOJ)
  • The Supreme Court could rule as soon as this month on President Trump's tariff authority as companies file lawsuits to get refunds. Washington Post
  • Elon Musk, and officials from the Trump administration criticized EU over a social media fine. Senator Ted Cruz called on President Trump to impose sanctions on EU and Mr. Musk says EU should be abolished. Fox Business
  • Canada, Mexico, and the U.S. agreed to work toward renewing the existing USMCA. WSJ
  • House Speaker Mike Johnson expected to unveil Republican healthcare plan next week, while Senate will vote on a Democratic bill. Neither healthcare bill is expected to pass. Axios
  • President Trump is considering ways to lower beef prices. WSJ
  • President Trump will soon announce $12 billion in farming aid. Bloomberg
  • JP Morgan CEO Jamie Dimon says Europe's slow bureaucracy poses an economic risk to U.S. Bloomberg
  • ECB member Schnabel suggested the ECB's next move is likely to be a rate hike but conceded that rates were unlikely to change soon
  • China's November exports 5.9% yr/yr (expected 3.8%; prior -1.1%) and imports 1.9% yr/yr (expected 2.8%; prior 1.0%)
  • Japan's Q3 GDP -0.6% qtr/qtr (expected -0.4%; last 0.5%) and -2.3% annualized (expected -1.8%; prior 2.1%); Q3 GDP Price Index 3.4% yr/yr (expected 2.8%; prior 3.3%)
• Commodities:
  • WTI crude: -1.0% to $59.46/bbl
  • Gold: UNCH at $4241.00/ozt
  • Copper: -0.3% to $5.45/lb
• Currencies:
  • EUR/USD: UNCH at 1.1648
  • GBP/USD: -0.1% to 1.3318
  • USD/CNH: UNCH at 7.0669
  • USD/JPY: +0.2% to 155.62
• The Day Ahead:
  • $58 bln 3-yr Treasury note auction results at 13:00 ET