|10-Year: +3/32....2.632%.... GNMAs: .... USD/JPY: 109.77.... EUR/USD: 1.1324|
-- Treasuries remain buoyant amid more weak data from Europe and selling in U.S. equities
Treasuries and Dollar Settle Near Week's Highs
- U.S. Treasuries ended their positive week on a higher note. True to this week's form, Treasuries started the day with modest gains after the overnight session saw more weakness in European equity markets, which followed more disappointing data from Italy and a warning from the country's stats agency that a pronounced decline has been observed in leading indicators. The higher start was followed by a modest bid that persisted into midday trade and was supported in part by a shaky start from U.S. stocks. However, Treasuries remained near their highs into the afternoon, even as equities erased a large part of their losses with the tech-heavy Nasdaq Composite making an appearance in the green. The market saw some very slight backtracking in the afternoon, which lifted the 10-yr yield from a five-week low to a one-week low. The 30-yr yield, meanwhile, finished the day at its lowest level since January 7. The slope of the yield curve saw some slight flattening this week, as the 2s10s spread tightened to 17 bps from last Friday's 19 bps while the 2s30s spread ended the week one basis point tighter at 52 bps. The U.S. Dollar Index backed down from a five-week high, but still eked out its seventh consecutive advance, extending this week's gain to 1.1%.
- Yield Check:
- 2-yr: -1 bp to 2.46%
- 3-yr: -1 bp to 2.44%
- 5-yr: -2 bps to 2.44%
- 10-yr: -2 bps to 2.63%
- 30-yr: -2 bps to 2.98%
- Fuji News Network reported that U.S. officials have booked hundreds of hotel rooms in Da Nang, Vietnam, suggesting the city will host the second meeting between President Trump and North Korea's Chairman Kim Jong-un on February 27/28.
- The Reserve Bank of Australia released its quarterly statement on monetary policy, which confirmed the central bank's shift to a neutral stance. The RBA lowered Australia's GDP growth forecast for the year through June to 2.50% from 3.25%. The trimmed mean inflation forecast was lowered to 1.75% from 2.00%.
- French Industrial Production increased 0.8% month-over-month in December, as expected (last -1.5%). Q4 Nonfarm Payrolls increased 0.1% quarter-over-quarter, as expected (last 0.1%)
- Italy's Industrial Production decreased 0.8% month-over-month in December (expected 0.4%; last -1.7%) while the year-over-year reading fell 5.5% (expected -3.0%; last -2.6%)
- U.S. Ambassador to the EU Gordon Sondland was quoted by Bloomberg as saying, "The good faith and understanding that existed on July 25 has not been followed through on." The comments were made in reference to the lack of progress in trade negotiations between the United States and the European Union, suggesting the issue could resurface soon.
- WTI crude: +0.1% to $52.76/bbl
- Gold: +0.3% to $1314.15/ozt
- Copper: -0.8% to $2.81/lb
- EUR/USD: -0.1% to 1.1324
- GBP/USD: -0.1% to 1.2935
- USD/CNH: UNCH at 6.7838
- USD/JPY: UNCH at 109.77
- The Week Ahead:
- Tuesday: January NFIB Small Business Optimism Index (prior 104.4) at 6:00 ET and December Job Openings and Labor Turnover Survey (prior 6.888 mln) at 10:00 ET
- Wednesday: Weekly MBA Mortgage Index (prior -2.5%) at 7:00 ET; January CPI (prior -0.1%) and Core CPI (prior 0.2%) at 8:30 ET; weekly crude oil inventories (prior +1.3 mln) at 10:30 ET; and December Treasury Budget (prior -$23.20 bln) at 14:00 ET
- Thursday: December Retail Sales (prior 0.2%), Retail Sales ex-auto (prior 0.2%), January PPI (prior -0.2%), core PPI (prior -0.1%), weekly Initial Claims (prior 234,000), and Continuing Claims (prior 1.736 mln) at 8:30 ET; November Business Inventories (prior 0.6%) at 10:00 ET; and weekly natural gas inventories (prior -237 bcf) at 10:30 ET
- Friday: January Export Prices ex-agriculture (prior -1.1%), Import Prices ex-oil (prior 0.0%), and February Empire Manufacturing Survey (prior 3.9) at 8:30 ET; January Industrial Production (prior 0.3%) and Capacity Utilization (prior 78.7%) at 9:15 ET; and Preliminary February Michigan Sentiment Survey (prior 91.2) at 10:00 ET