Bond Market Update

Short End Defends Early Lead

• U.S. Treasuries remain near their starting levels with shorter tenors maintaining their early show of relative strength. The entire complex backpedaled through the first hour of action, but a bounce began taking shape once the 5-yr note made a brief appearance in the red. The ensuing rebound has sent 5s and shorter tenors to fresh highs while the long bond remains modestly lower. Economic data released this morning included a jobless claims report (209,000; Briefing.com consensus 205,000) that was a touch worse than expected, while the productivity report for Q3 was left unrevised, and the trade deficit widened in November (-$58.3 bln; Briefing.com consensus -$43.5 bln; prior -$29.2 bln). Reported not long ago, Factory Orders (2.7%; Briefing.com consensus 0.5%) were much stronger than expected in November. Equities are facing some early pressure with the Nasdaq (-1.7%) leading to the downside while the S&P 500 (-0.8%) shows a slimmer loss.
• Yield Check:
  • 2-yr: -2 bps to 3.56%
  • 3-yr: -2 bps to 3.63%
  • 5-yr: -2 bps to 3.82%
  • 10-yr: UNCH at 4.25%
  • 30-yr: +2 bps to 4.88%