Bond Market Update

Long End Ahead as Jobs Report Looms

• U.S. Treasuries are on track for a slightly higher start in longer tenors ahead of the unusual Wednesday release of the Employment Situation report (Briefing.com consensus 68,000) at 8:30 ET. The January jobs report was originally scheduled to come out on Friday, but it was delayed by the brief government shutdown. Treasury futures inched higher during a quiet overnight session that lacked the participation of Japan's markets due to a holiday. Elsewhere, China reported another muted inflation reading for January (+0.2% m/m and yr/yr) while PPI (-1.4% yr/yr) deflated for the 40th month in a row. The U.S. Treasury will follow yesterday's 3-yr note sale with a $42 bln 10-yr note offering at 13:00 ET. Crude oil is rising toward its January high (66.48) while the U.S. Dollar Index is down 0.1% at 96.71.
• Yield Check:
  • 2-yr: +1 bp to 3.46%
  • 3-yr: UNCH at 3.52%
  • 5-yr: UNCH at 3.70%
  • 10-yr: -2 bps to 4.13%
  • 30-yr: -1 bp to 4.78%

• News:
  • Standard & Poor's noted that outstanding JGBs have an average maturity of about nine years.
  • South Korea's exports were up 44.4% yr/yr through the first ten days of February with chip exports surging 137.6% yr/yr.
  • European Central Bank policymaker Schnabel penned an op-ed in FT, calling for a closer integration of the European common market.
  • China's January CPI was up 0.2% m/m (expected 0.3%; last 0.2%), rising 0.2% yr/yr (expected 0.4%; last 0.8%). January PPI was down 1.4% yr/yr (expected -1.5%; last -1.9%).
  • South Korea's January Unemployment Rate fell to 3.0% from 3.3%.
  • Australia's Q4 Invest Housing Finance increased 7.9% m/m (last 9.2%) and Home Loans rose 10.6% m/m (last 6.2%).
  • Italy's December Industrial Production was down 0.4% m/m (expected -0.6%; last 1.5%) but up 3.2% yr/yr (last 1.4%).
• Commodities:
  • WTI Crude: +2.1% to $65.31/bbl
  • Gold: +1.2% to $5093.20/ozt
  • Copper: +2.0% to $6.03/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1900
  • GBP/USD: +0.3% to 1.3680
  • USD/CNH: +0.1% to 6.9105
  • USD/JPY: -0.5% to 153.59
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -0.3%; prior -8.9%)
  • 8:30 ET: January Nonfarm Payrolls (Briefing.com consensus 68,000; prior 50,000), Nonfarm Private Payrolls (Briefing.com consensus 60,000; prior 37,000), Unemployment Rate (Briefing.com consensus 4.4%; prior 4.4%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), and Average Workweek (Briefing.com consensus 34.2; prior 34.2)
  • 10:30 ET: Weekly crude oil inventories (prior -3.46 mln)
  • 14:00 ET: January Treasury Budget (Briefing.com consensus -$190.0 bln; prior -$144.7 bln)
• Treasury Auctions:
  • 13:00 ET: $42 bln 10-yr Treasury note auction results