Bond Market Update

 Steady Start Ahead

• U.S. Treasuries are on track for flat start with the long end showing slight relative strength after a night that saw gains in most other sovereign debt, including JGBs. The flat start will be put to a test with the market set to receive a revised reading of Q3 GDP (Briefing.com consensus 4.3%) at 8:30 ET, followed by reports on Personal Income/Outlays for October and November at 10:00 ET. Greenland has remained in the conversation with the latest reports suggesting that the framework, which President Trump alluded to yesterday, would give the U.S. access to small pockets of land for military bases. Crude oil is giving back its gain from yesterday while the U.S. Dollar Index is down 0.1% at 98.65.
• Yield Check:
  • 2-yr: UNCH at 3.60%
  • 3-yr: +1 bp to 3.67%
  • 5-yr: UNCH at 4.83%
  • 10-yr: UNCH at 4.25%
  • 30-yr: UNCH at 4.87%

• News:
  • Expectations for a near-term rate hike from the Bank of Japan also increased. The BoJ will release its latest statement overnight, but a rate hike is not expected just yet.
  • German Chancellor Merz called for "significant" defense investment. · Bundesbank expects only modest growth in the German economy in Q1.
  • Japan's December trade surplus reached JPY105.7 bln (expected JPY357.0 bln; last JPY316.7 bln) as imports grew 5.3% yr/yr (expected 3.6%; last 1.3%) and exports rose 5.1% yr/yr (expected 6.1%; last 6.1%).
  • South Korea's Q4 GDP contracted 0.3% qtr/qtr (expected 0.1%; last 1.3%) but was up 1.5% yr/yr (expected 1.9%; last 1.8%).
  • Hong Kong's December CPI was up 0.3% m/m (last 0.0%), rising 1.4% yr/yr (last 1.2%).
  • Australia's December employment increased by 65,200 (expected 28,300; last -28,700) and full employment increased by 54,800 (last -65,300). December Unemployment Rate fell to 4.1% from 4.3% (expected 4.4%) and Participation Rate ticked up to 66.7% from 66.6% (expected 66.8%).
  • New Zealand's December Electronic Card Retail Sales were down 0.1% m/m (last 1.2%), falling 0.5% yr/yr (last 1.6%).
  • U.K.'s December Public Sector Net Borrowing reached GBP11.58 bln (expected GBP13.40 bln; last GBP10.49 bln). January CBI Distributive Trades Survey rose to -17 from -44 (expected -35).
• Commodities:
  • WTI Crude: -1.6% to $59.67/bbl
  • Gold: -0.1% to $4832.80/ot
  • Copper: -0.5% to $5.74/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1703
  • GBP/USD: UNCH at 1.3430
  • USD/CNH: +0.3% to 6.9761
  • USD/JPY: +0.3% to 158.73
• Data out Today:
  • 8:30 ET: Q3 GDP -- revised (Briefing.com consensus 4.3%; prior 4.3%), Q3 GDP Deflator -- revised (Briefing.com consensus 3.7%; prior 3.8%), and weekly Initial Claims (Briefing.com consensus 200,000; prior 198,000), and Continuing Claims (prior 1.884 mln)
  • 10:00 ET: October Personal Income (Briefing.com consensus 0.3%; prior 0.4%), Personal Spending (Briefing.com consensus 0.1%; prior 0.4%), PCE Price Index (Briefing.com consensus 0.2%; prior 0.3%), an Core PCE Price Index (Briefing.com consensus 0.2%; prior 0.2%), November Personal Income (Briefing.com consensus 0.4%; prior NA), Personal Spending (Briefing.com consensus 0.4%; prior NA), PCE Prices (Briefing.com consensus 0.2%; prior NA), and Core PCE Prices (Briefing.com consensus 0.2%; prior NA)
  • 10:30 ET: Weekly natural gas inventories (prior -71 bcf)
  • 12:00 ET: Weekly crude oil inventories (prior +3.39 mln)