Bond Market Update

Extending Recent Rally

• U.S. Treasuries are on track for a firmly higher start, seeking their fifth consecutive day of gains. Treasury futures inched higher through the Asian session, accelerating their advance once the focus shifted to action in Europe. The overnight news flow was light once again, but it is worth noting that the Bank of Korea announced a 25-basis point rate while dovish comments from a Bank of England policymaker have boosted rate cut expectations for the BoE. The U.S. data slate will feature the Consumer Confidence report for February (Briefing.com consensus 103.1; prior 104.1) at 10:00 ET, preceded by December FHFA Housing Price Index (prior 0.3%) and December S&P Case-Shiller Home Price Index (Briefing.com consensus 4.4%; prior 4.3%) at 9:00 ET. Later in the day, the U.S. Treasury will sell $70 bln in 5-yr notes. Crude oil is slipping toward yesterday's low while the U.S. Dollar Index is down 0.1% at 106.48.
• Yield Check:
  • 2-yr: -5 bps to 4.12%
  • 3-yr: -6 bps to 4.11%
  • 5-yr: -7 bps to 4.16%
  • 10-yr: -6 bps to 4.33%
  • 30-yr: -6 bps to 4.59%

• News:
  • The People's Bank of China left its one-year medium-term lending facility rate at 2.0%.
  • The Bank of Korea lowered its policy rate by 25 basis points to 2.75%, as expected, with just two policymakers open to additional cuts. The central bank lowered its domestic growth forecast for 2025 to 1.5% from 1.9%.
  • Bank of England policymaker Dhingra spoke in favor of aggressive rate cuts.
  • Japan's January Corporate Services Price Index was up 3.1% yr/yr (expected 2.9%; last 3.0%).
  • Hong Kong's January trade surplus reached $2.1 bln (last deficit of $34.5 bln) as imports rose 0.5% m/m (last -1.1%) and exports ticked up 0.1% m/m (last 5.2%).
  • Germany's Q4 GDP contracted 0.2% qtr/qtr, as expected (last 0.1%), falling 0.2% yr/yr, as expected (last -0.3%).
• Commodities:
  • WTI Crude: -0.7% to $70.23/bbl
  • Gold: -0.9% to $2937.20/ozt
  • Copper: +0.1% to $4.522/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0491
  • GBP/USD: +0.2% to 1.2654
  • USD/CNH: +0.2% to 7.2632
  • USD/JPY: UNCH at 149.68
• Data out Today:
  • 9:00 ET: December FHFA Housing Price Index (prior 0.3%) and December S&P Case-Shiller Home Price Index (Briefing.com consensus 4.4%; prior 4.3%)
  • 10:00 ET: February Consumer Confidence (Briefing.com consensus 103.1; prior 104.1)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results