Bond Market Update

Treading Calmer Waters

• U.S. Treasuries are on course for a largely flat start after a volatile couple days in reaction to hot CPI (0.5%; Briefing.com consensus 0.3%) and PPI (0.4%; Briefing.com consensus 0.2%) reports for January. Treasury futures spent the early portion of the night in a sideways slog, expanding their range a bit once the focus shifted to action in Europe. The overnight news flow was on the light side once again with a limited flow of market-moving data. China reported much bigger than expected social financing growth in January while the eurozone's GDP expanded a slight 0.1% in Q4. The U.S. data slate will feature January Retail Sales (Briefing.com consensus 0.0%; prior 0.4%), Retail Sales ex-auto (Briefing.com consensus 0.3%; prior 0.4%) at 8:30 ET, followed by January Industrial Production (Briefing.com consensus 0.3%; prior 0.9%) and Capacity Utilization (Briefing.com consensus 77.7%; prior 77.6%) at 9:15 ET. Crude oil is extending yesterday's bounce off a fresh low for the year while the U.S. Dollar Index is down 0.3% at 106.99.
• Yield Check:
  • 2-yr: -2 bps to 4.29%
  • 3-yr: -2 bps to 4.31%
  • 5-yr: -1 bp to 4.38%
  • 10-yr: UNCH at 4.53%
  • 30-yr: +1 bp to 4.74%

• News:
  • President Trump and India's Prime Minister Modi signed an agreement to expand collaboration in defense, energy, and trade routes.
  • The Bank of Japan's Board is expected to gain a hawkish member once Junko Koeda is confirmed next week.
  • A former Reserve Bank of Australia policymaker cautioned that the market is overestimating the likelihood of a 25-basis point cut next week.
  • Halifax observed that first-time buyers make up 20% of the U.K.'s housing market.
  • China's January New Loans totaled CNY5.13 trln (expected CNY770.0 bln; last CNY990 bln), January Outstanding Loans grew 7.5% yr/yr (expected 7.3%; last 7.6%), and January Total Social Financing reached CNY7.06 trln (expected CNY6.40 trln; last CNY2.86 trln).
  • South Korea's January Export Price Index was up 8.5% yr/yr (last 10.5%) and Import Price Index was up 6.6% yr/yr (last 6.8%). January Unemployment Rate fell to 2.9% from 3.7%. · India's January WPI Inflation was up 2.31% yr/yr (expected 2.50%; last 2.37%).
  • Singapore's Q4 GDP was up 0.5% qtr/qtr (expected 0.1%; last 3.0%), growing 5.0% yr/yr (expected 4.3%; last 5.7%).
  • New Zealand's January FPI was up 1.9% m/m (last 0.1%) and January Business NZ PMI hit 51.4 (last 45.9).
  • Eurozone's Q4 GDP was up 0.1% qtr/qtr (expected 0.0%; last 0.4%), growing 0.9% yr/yr, as expected (last 0.9%). Q4 Employment increased by 0.1% qtr/qtr, as expected (last 0.2%), rising 0.6% yr/yr (expected 0.8%; last 1.0%).
  • Germany's January WPI was up 0.9% m/m (expected 0.2%; last 0.1%), rising 0.9% yr/yr (last 0.1%).
  • Spain's January CPI was up 0.2% m/m, as expected (last 0.5%), rising 2.9% yr/yr (expected 3.0%; last 2.8%). January Core CPI was up 2.4% yr/yr, as expected (last 2.6%).
  • Swiss January PPI was up 0.1% m/m, as expected (last 0.0%) but down 0.3% yr/yr (last -0.9%).
• Commodities:
  • WTI Crude: +0.8% to $71.89/bbl
  • Gold: +0.2% to $2951.00/ozt
  • Copper: +0.2% to $4.79/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0472
  • GBP/USD: +0.2% to 1.2584
  • USD/CNH: UNCH at 7.2666
  • USD/JPY: -0.1% to 152.62
• Data out Today:
  • 8:30 ET: January Retail Sales (Briefing.com consensus 0.0%; prior 0.4%), Retail Sales ex-auto (Briefing.com consensus 0.3%; prior 0.4%), and January Export Prices (prior 0.3%), Export Prices ex-agriculture (prior 0.3%), Import Prices (prior 0.1%), and Import Prices ex-oil (prior 0.1%)
  • 9:15 ET: January Industrial Production (Briefing.com consensus 0.3%; prior 0.9%) and Capacity Utilization (Briefing.com consensus 77.7%; prior 77.6%)
  • 10:00 ET: December Business Inventories (Briefing.com consensus 0.1%; prior 0.1%)