Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a flat start. Treasury futures spent the overnight session in a sideways range with a slight downward bias, making for a shallow pullback from yesterday's rally that accompanied ongoing weakness in equities. Investor sentiment improved a touch overnight, with equity futures pointing to a higher start in the U.S. after a mixed night in global markets. Investors received a few economic reports, but the overall market impact has been subdued. However, it is worth noting that Stellantis is down nearly 30% in Europe after recording a EUR22.2 bln writedown due to mounting losses from its electric vehicle strategy. Crude oil holds a modest loss while the U.S. Dollar Index is flat at 97.83.
• Yield Check:
  • 2-yr: UNCH at 3.49%
  • 3-yr: UNCH at 3.56%
  • 5-yr: UNCH at 3.75%
  • 10-yr: UNCH at 4.21%
  • 30-yr: UNCH at 4.86%

• News:
  • The Reserve Bank of India left its policy rate at 5.25%, as expected.
  • Reserve Bank of Australia Governor Bullock said that while inflation has fallen substantially, it will not return to target until mid-2027.
  • Japan's Lower House election will take place over the weekend with some speculating that the ruling coalition could win super majority.
  • Japan's December Household Spending was down 2.9% m/m (expected -1.3%; last 6.2%), falling 2.6% yr/yr (expected -0.5%; last 2.9%). December Leading Index rose to 110.2 from 109.9 (expected 109.8) and Coincident Indicator was down 0.4% m/m (last -1.0%).
  • South Korea's December Current Account surplus reached $18.70 bln (last surplus of $12.90 bln).
  • Germany's December trade surplus reached EUR17.1 bln (expected surplus of EUR14.1 bln; last surplus of EUR13.6 bln) as imports grew 1.4% m/m (expected 0.2%: last 0.7%) and exports rose 4.0% m/m (expected 1.0%; last -2.5%). December Industrial Production was down 1.9% m/m (expected -0.2%; last 0.2%), falling 0.6% yr/yr (last 0.4%).
  • U.K.'s January Halifax House Price Index was up 0.7% m/m (expected 0.1%; last -0.5%), rising 1.0% yr/yr (last 0.4%).
  • France's December trade deficit reached EUR4.8 bln (expected deficit of EUR3.8 bln; last deficit of EUR4.0 bln) and December Current Account deficit reached EUR600 mln (last deficit of EUR300 mln).
  • Spain's December Industrial Production was down 0.3% yr/yr (last 4.6%).
  • Swiss January Unemployment Rate fell to 2.9% from 3.0% (expected 3.0%).
• Commodities:
  • WTI Crude: -0.4% to $63.07/bbl
  • Gold: +0.4% to $4908.30/ozt
  • Copper: -0.2% to $5.813/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1792
  • GBP/USD: +0.5% to 1.3592
  • USD/CNH: UNCH at 6.9368
  • USD/JPY: UNCH at 157.11
• Data out Today: 
  • 10:00 ET: Preliminary February University of Michigan Consumer Sentiment (Briefing.com consensus 54.3; prior 56.4)
  • 15:00 ET: December Consumer Credit (Briefing.com consensus $8.4 bln; prior $4.2 bln)