Bond Market Update

Updated: 02-Jan-26 15:15 ET
Treasury Market Summary

Slipping Into 2026

  • U.S. Treasuries started 2026 with modest losses in the 5-yr note and longer tenors while the short end resisted the pressure, leaving the 2-yr note near its closing level from Wednesday. The first session of the year saw a slightly higher start despite early weakness in other sovereign debt. The early strength began fading shortly after the start with longer tenors seeing a continuation of late selling on New Year's Eve. The extension of Wednesday's losses sent the 30-yr yield to its highest close since early September while the 10-yr yield stopped just shy of its December high. Up front, the outperformance in the 2-yr note made for a continuation of this week's show of relative strength that kept it at its unchanged level while longer tenors recorded slim losses for the week. The steady Friday retreat unfolded alongside a sloppy equity session that saw a lot of big moves in individual stocks, masked by little headline change in the S&P 500 (+0.2%). Crude oil dipped, narrowing this week's gain to $0.66/bbl while the U.S. Dollar Index rose 0.1% to 98.42, gaining 0.4% for the week.
  • Yield Check:
    • 2-yr: UNCH at 3.48% (UNCH for the week)
    • 3-yr: +1 bp to 3.55% (+2 bps this week)
    • 5-yr: +2 bps to 3.74% (+4 bps this week)
    • 10-yr: +2 bps to 4.19% (+5 bps this week)
    • 30-yr: +2 bps to 4.86% (+4 bps this week)
  • News:
    • OPEC+ is not expected to make any changes to its output plans during this Sunday's policy meeting.
    • South Korea's December Manufacturing PMI hit 50.1 (last 49.4).
    • Singapore's Q4 GDP expanded 1.9% qtr/qtr (last 2.4%), growing 5.7% yr/yr (last 4.3%). Q4 URA Property Index was up 0.7% qtr/qtr (last 0.9%).
    • Hong Kong's November Retail Sales rose 6.5% yr/yr (last 6.9%).
    • Australia's December Manufacturing PMI hit 51.6 (expected 52.2; last 51.6).
    • India's December Manufacturing PMI hit 55.0 (expected 55.7; last 56.6).
    • Eurozone's December Manufacturing PMI hit 48.8 (expected 49.2; last 49.6). November M3 Money Supply rose 3.0% yr/yr (expected 2.7%; last 2.8%), November Private Sector Loans increased 2.9% yr/yr (expected 2.8%; last 2.8%), and November Loans to nonfinancials were up 3.1% yr/yr (last 2.9%).
    • Germany's December Manufacturing PMI hit 47.0 (expected 47.7; last 48.2).
    • U.K.'s December Manufacturing PMI hit 50.6 (expected 51.2; last 51.2). December Nationwide HPI was down 0.4% m/m (expected 0.1%; last 0.3%) but up 0.6% yr/yr (expected 1.2%; last 1.8%).
    • France's December Manufacturing PMI hit 50.7 (expected 50.6; last 47.8).
    • Italy's December Manufacturing PMI hit 47.9 (expected 50.0; last 50.6).
    • Spain's December Manufacturing PMI hit 49.6 (expected 51.2; last 51.5).
  • Today's Data:
    • The S&P Global U.S. Manufacturing PMI hit 51.8 in the final reading for December, unchanged from the preliminary reading and down from 52.2 in November.
  • Commodities:
    • WTI crude: -0.1% to $57.34/bbl
    • Gold: -0.3% to $4329.00/ozt
    • Copper: +0.2% to $5.69/lb
  • Currencies:
    • EUR/USD: -0.2% to 1.1719
    • GBP/USD: -0.1% to 1.3453
    • USD/CNH: -0.1% to 6.9704
    • USD/JPY: +0.2% to 156.87
  • The Week Ahead:
    • Monday: December ISM Manufacturing Index (Briefing.com consensus 48.4%; prior 48.2%) at 10:00 ET
    • Tuesday: Final December S&P Global U.S. Services PMI (flash 52.9; November 54.1) at 9:45 ET
    • Wednesday: Weekly MBA Mortgage Index (prior NA) at 7:00 ET; December ADP Employment Change (Briefing.com consensus 45,000; prior -32,000) at 8:15 ET; December ISM Non-Manufacturing Index (Briefing.com consensus 52.2%; prior 52.6%), November Factory Orders (Briefing.com consensus -1.0%; prior NA), November job openings (prior 7.670 mln), and November Business Inventories (prior NA) at 10:00 ET; and weekly crude oil inventories (prior 1.93 mln) at 10:30 ET
    • Thursday: Preliminary Q3 Productivity (Briefing.com consensus 2.5%; prior 3.3%), preliminary Q3 Unit Labor Costs (Briefing.com consensus 0.8%; prior 1.0%), October Trade Balance (Briefing.com consensus -$61.3 bln; prior -$59.6 bln), weekly Initial Claims (Briefing.com consensus 217,000; prior 199,000), and Continuing Claims (prior 1.866 mln) at 8:30 ET; October Wholesale Inventories (Briefing.com consensus 0.2%; prior 0.5%) at 10:00 ET; weekly natural gas inventories (prior -38 bcf) at 10:30 ET; and November Consumer Credit (Briefing.com consensus $10.3 bln; prior $9.2 bln) at 15:00 ET
    • Friday: December Nonfarm Payrolls (Briefing.com consensus 55,000; prior 64,000), Nonfarm Private Payrolls (Briefing.com consensus 50,000; prior 69,000), Unemployment Rate (Briefing.com consensus 4.5%; prior 4.6%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.1%), Average Workweek (Briefing.com consensus 34.3; prior 34.3), September Housing Starts (Briefing.com consensus 1.320 mln; prior 1.307 mln), September Building Permits (Briefing.com consensus 1.340 mln; prior 1.312 mln), October Housing Starts (Briefing.com consensus 1.340 mln), and October Building Permits (Briefing.com consensus 1.355 mln) at 8:30 ET; and preliminary January University of Michigan Consumer Sentiment (Briefing.com consensus 53.0; prior 52.9) at 10:00 ET
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