Bond Market Update

Longer Tenors Ahead

• U.S. Treasuries are on track for a higher start with the long end expected to show some relative strength at the open. The U.S. session will follow a busy night that saw a continuation of the massive rally in precious metals with gold futures marking a high just above $5100/ozt while silver tagged an overnight high just above $110/ozt. Besides the moves in metals, the Japanese yen has continued Friday's rally against the dollar amid reports that the New York Fed conducted rate checks with banks, suggesting that an intervention is imminent. To that point, Japan's Prime Minister Takaichi hinted at an intervention during a televised debate on Sunday. Finally, there is a growing likelihood of a partial government shutdown after Senator Schumer said that Democrats will block a funding package if it includes funds for the Department of Homeland Security. Crude oil holds a slim gain while the U.S. Dollar Index is down 0.4% at 97.21, falling to its lowest level since late September.
• Yield Check:
  • 2-yr: -1 bp to 3.59%
  • 3-yr: -1 bp to 3.66%
  • 5-yr: -2 bps to 3.82%
  • 10-yr: -3 bps to 4.21%
  • 30-yr: -2 bps to 4.81%

• News:
  • China's President Xi removed one of PLA's top generals.
  • India is planning to sign a trade deal with the EU tomorrow.
  • French Prime Minister Lecornu forced a spending bill for 2026 through parliament without a vote.
  • France will preside over a call between G-7 finance ministers tomorrow.
  • Ukraine's president said that a security agreement with the U.S. is ready.
  • Japan's November Leading Index ticked up to 109.9 from 109.8 (expected 110.5) and Coincident Indicator decreased 1.0% m/m (expected -0.7%; last -1.3%).
  • Singapore's December Industrial Production fell 13.3% m/m (expected -15.2%; last -7.8%) but was up 8.3% yr/yr (expected 10.1%; last 18.2%).
  • Germany's January ifo Business Climate Index remained at 87.6 (expected 88.3; last 87.6). January Current Assessment ticked up to 85.7 from 85.6 and Business Expectations dipped to 89.5 from 89.7.
  • Spain's December PPI was down 3.0% yr/yr (last -2.5%).
• Commodities:
  • WTI Crude: -0.3% to $60.92/bbl
  • Gold: +2.1% to $5083.40/ozt
  • Copper: +0.9% to $6.00/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1842
  • GBP/USD: +0.1% to 1.3648
  • USD/CNH: +0.1% to 6.9530
  • USD/JPY: -1.0% to 154.14
• Data out Today:
  • 8:30 ET: November Durable Orders (Briefing.com consensus 1.1%; prior -2.2%) and Durable Orders ex-transport (Briefing.com consensus 0.3%; prior 0.2%)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results