Bond Market Update

Little Changed Ahead of January Jobs Report

• U.S. Treasuries are on track for a largely flat start ahead of the 8:30 ET release of the Employment Situation report for January (Briefing.com consensus 155,000; prior 256,000), which will help shape the market's rate cut expectations. Treasury futures spent the night in a narrow range, inching lower during the Asian session, followed by a bounce once the focus shifted to action in Europe. The night was relatively quiet on the news front and there was limited movement in other sovereign debt. The Reserve Bank of India lowered its policy rate by 25 basis points to 6.25%, which was expected. Crude oil is rising off its lowest level of the year while the U.S. Dollar Index is up 0.1% at 107.83.
• Yield Check:
  • 2-yr: +2 bps to 4.23%
  • 3-yr: +1 bp to 4.24%
  • 5-yr: +1 bp to 4.28%
  • 10-yr: UNCH at 4.44%
  • 30-yr: -1 bp to 4.64%

• News:
  • Japan's Prime Minister Ishiba is expected to discuss joint AI and chip development during a meeting with President Trump.
  • FT speculated that a reform of Germany's debt brake laws could introduce some volatility into the bond market.
  • Japan's December Household Spending rose 2.3% m/m (expected -0.5%; last 0.4%), increasing 2.7% yr/yr (expected 0.2%; last -0.4%). December Leading Index rose to 108.9 from 107.5 (expected 108.2) and Coincident Indicator was up 1.4% m/m (last -1.4%).
  • Germany's December trade surplus reached EUR20.7 bln (expected surplus of EUR17.0 bln; last surplus of EUR19.2 bln) as imports rose 2.1% m/m (expected 1.8%; last -2.7%) and exports increased 2.9% m/m (expected -0.6%; last 2.3%). December Industrial Production fell 2.4% m/m (expected -0.7%; last 1.3%), dropping 3.1% yr/yr (last -3.0%).
  • U.K.'s January Halifax House Price Index was up 0.7% m/m (expected 0.4%; last -0.2%), rising 3.0% yr/yr (last 3.4%).
  • France's December trade deficit reached EUR3.9 bln (expected deficit of EUR5.3 bln; last deficit of EUR6.3 bln) and December Current Account surplus reached EUR2.4 bln (last deficit of EUR1.2 bln). Q4 Nonfarm Payrolls fell 0.2% qtr/qtr (expected -0.1%; last 0.1%).
  • Spain's December Industrial Production rose 2.1% yr/yr (expected 0.5%; last -0.1%).
  • Swiss Q1 SECO Consumer Climate improved to -21 from -27 (expected -31).
• Commodities:
  • WTI Crude: +0.6% to $71.02/bbl
  • Gold: +0.4% to $2888.00/ozt
  • Copper: +1.4% to $4.522/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0374
  • GBP/USD: +0.1% to 1.2447
  • USD/CNH: +0.1% to 7.2926
  • USD/JPY: +0.4% to 152.00
• Data out Today:
  • 8:30 ET: January Nonfarm Payrolls (Briefing.com consensus 155,000; prior 256,000), Nonfarm Private Payrolls (Briefing.com consensus 163,000; prior 223,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), Unemployment Rate (Briefing.com consensus 4.1%; prior 4.1%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)
  • 10:00 ET: Preliminary February University of Michigan Consumer Sentiment (Briefing.com consensus 71.3; prior 71.1) and December Wholesale Inventories (Briefing.com consensus -0.5%; prior -0.2%)
  • 15:00 ET: December Consumer Credit (Briefing.com consensus $13.4 bln; prior -$7.5 bln)