Bond Market Update

Longer Tenors Trimming Friday Gains

• U.S. Treasuries are on track for a lower start to the week with longer tenors expected to pace the early selling after outperforming on Friday. Treasury futures showed some brief strength last evening before embarking on a steady retreat into the night. The overnight data flow was nearly non-existent, leaving the focus on news that the Department of Justice has opened a probe into renovation costs of the Fed's Eccles Building. Fed Chairman Powell believes that the action is aimed at exerting political pressure while Senator Tillis said that he will block the confirmation process for the new Fed Chairman until the inquiry is resolved. The U.S. session will not feature any data today, but the U.S. Treasury will sell $58 bln in 3-yr notes at 11:30 ET, followed by a $39 bln 10-yr note sale at 13:00 ET. Crude oil is falling back below $59/bbl while the U.S. Dollar Index is down 0.4% at 98.79.
• Yield Check:
  • 2-yr: +1 bp to 3.55%
  • 3-yr: +1 bp to 3.61%
  • 5-yr: +2 bps to 3.78%
  • 10-yr: +4 bps to 4.21%
  • 30-yr: +4 bps to 4.86%

• News:
  • Japan's Prime Minister Takaichi is reportedly looking to call a snap election for February to boost her coalition's standing in parliament.
  • South Korea's exports through the first ten days of January were down 2.3% yr/yr but chip exports still jumped 45.6% yr/yr while auto and ship exports fell.
  • Australia is planning to establish a critical minerals strategic reserve by the end of the year.
  • There are some concerns that France will go into the spring without a full budget agreement for the year if the tentative coalition government collapses.
  • President Trump said that he wants to impose a 10% cap on credit card interest.
  • India's December CPI was up 1.33% yr/yr (expected 1.50%; last 0.71%).
  • Australia's December ANZ Job Advertisements decreased 0.5% m/m (last -1.5%).
  • Eurozone's January Sentix Investor Confidence rose to -1.8 from -6.2 (expected -5.1).
  • Swiss December SECO Consumer Climate rose to -31 from -34 (expected -33).
• Commodities:
  • WTI Crude: -0.3% to $58.99/bbl
  • Gold: +2.2% to $4598.60/ozt
  • Copper: +2.4% to $6.044/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1679
  • GBP/USD: +0.5% to 1.3464
  • USD/CNH: -0.1% to 6.9674
  • USD/JPY: UNCH at 157.87
• No Data on Today's Schedule
• Treasury Auctions:
  • 11:30 ET: $58 bln 3-yr Treasury note auction results
  • 13:00 ET: $39 bln 10-yr Treasury note auction results