Bond Market Update

Opening Pressure Resisted

• U.S. Treasuries began the week on a mostly higher note after overcoming opening weakness which briefly lifted the 30-yr yield to a fresh high for the month (4.677%) while yields on shorter tenors stopped short of their highs from Friday. The trading day started with losses across the curve that were paced by the long bond after a fairly quiet start to the week in international markets. The opening retreat made for a continuation of last week's selling, but Treasuries found support immediately after the cash start, embarking on a slow rebound that continued into the early afternoon, lifting most tenors into the green. Economic data released this morning was limited to an above-consensus NAHB Housing Market Index for November (46; Briefing.com consensus 43; prior 43), preceding tomorrow's release of October Housing Starts (Briefing.com consensus 1.340 mln; prior 1.354 mln) and Building Permits (Briefing.com consensus 1.441 mln; prior 1.428 mln) at 8:30 ET. Crude oil had a strong showing, reclaiming roughly half of its loss from last week while the U.S. Dollar Index fell 0.4% to 106.26, backpedaling from a level not seen in over a year.
• Yield Check:
  • 2-yr: -2 bps to 4.28%
  • 3-yr: -2 bps to 4.25%
  • 5-yr: -2 bps to 4.28%
  • 10-yr: -1 bp to 4.41%
  • 30-yr: +1 bp to 4.61%

• News: 
  • The Biden administration authorized Ukraine to strike some targets inside Russia with American weapons.
  • Bank of Japan Governor Ueda said that the timing of further rate adjustment will be dependent on economic activity, the evolution of prices, and future financial conditions.
  • China will cancel export tax refunds on copper and aluminum, starting December 1.
  • Japan's September Core Machinery Orders were down 0.7% m/m (expected 1.4%; last -1.9%), falling 4.8% yr/yr (expected 2.2%; last -3.4%).
  • South Korea's October trade surplus reached $3.15 bln (last surplus of $3.17 bln) as imports grew 1.7% yr/yr (last 1.7%) and exports rose 4.6% yr/yr (last 4.6%).
  • Singapore's October trade surplus reached SGD4.41 bln (last surplus of SGD5.21 bln). October non-oil exports were down 7.4% m/m (last -0.6%), falling 4.6% yr/yr (last 0.9%).
  • New Zealand's Q3 Input PPI was up 1.9% qtr/qtr (expected 1.0%; last 1.4%) and Output PPI was up 1.5% qtr/qtr (expected 0.9%; last 1.1%).
  • Eurozone's September trade surplus reached EUR12.5 bln (expected surplus of EUR7.9 bln; last surplus of EUR4.1 bln).
  • U.K.'s November Rightmove House Price Index was up 1.2% yr/yr (last 1.0%).
  • Spain's September trade deficit reached EUR3.30 bln (last deficit of EUR4.80 bln).
  • Swiss Q3 Industrial Production rose 3.5% yr/yr (last 7.0%).
• Today's Data:
  • The NAHB Housing Market Index rose to 46 in November (Briefing.com consensus 43) from 43 in October.
• Commodities:
  • WTI crude: +3.2% to $69.18/bbl
  • Gold: +1.7% to $2613.20/ozt
  • Copper: +1.2% to $4.12/lb
• Currencies:
  • EUR/USD: +0.5% to 1.0594
  • GBP/USD: +0.5% to 1.2676
  • USD/CNH: -0.1% to 7.2309
  • USD/JPY: +0.3% to 154.69
• The Day Ahead:
  • 8:30 ET: October Housing Starts (Briefing.com consensus 1.340 mln; prior 1.354 mln) and Building Permits (Briefing.com consensus 1.441 mln; prior 1.428 mln)