Bond Market Update

Opening Gains Reversed

• Shorter-dated Treasuries have turned negative while longer tenors are on the verge of doing the same in the wake of today's better-than-expected economic data. The market first received an above-consensus Housing Starts (1.499 mln; Briefing.com consensus 1.318 mln) and Building Permits (1.483 mln; Briefing.com consensus 1.454 mln) report for December, followed by a much larger than expected increase in Industrial Production (0.9%; Briefing.com consensus 0.3%), which was coupled with an upward revision to the November reading (to 0.2% from -0.1%). The steady pullback from opening highs has coincided with a rally in equity futures ahead of the open. As a result, the S&P 500 is already up 0.9%, extending this week's advance to 2.8%, ahead of Monday's closure for Martin Luther King Jr Day.
• Yield Check:
  • 2-yr: +2 bps to 4.26%
  • 3-yr: +2 bps to 4.32%
  • 5-yr: +1 bp to 4.41%
  • 10-yr: -1 bp to 4.60%
  • 30-yr: -1 bp to 4.84%