Bond Market Update

Steady Start in Sight

• U.S. Treasuries are on track for a largely flat start after another quiet night in the futures market. Treasury futures dipped in early evening, maintaining a narrow sideways range through the rest of the night while other sovereign debts headed modestly higher. The night brought January Services PMI readings from major economies with most showing accelerating activity. The U.S. session will also include data from the services sector, though the ISM Non-Manufacturing Index for January is expected to show a deceleration in the pace of expansion (Briefing.com consensus 53.7%; prior 54.4%). The market will also receive the ADP Employment Change (Briefing.com consensus 43,000; prior 41,000) report at 8:15 ET and the U.S. Treasury will release its latest quarterly refunding statement at 8:30 ET. Precious metals have seen an extension of yesterday's rebound while crude oil hovers near $63.50/bbl. The U.S. Dollar Index is up 0.1% at 97.50 after a rangebound night.
• Yield Check:
  • 2-yr: +1 bp to 3.58%
  • 3-yr: UNCH at 3.65%
  • 5-yr: UNCH at 3.84%
  • 10-yr: UNCH at 4.27%
  • 30-yr: -1 bp to 4.90%

• News:
  • India's trade minister said that the deal with the U.S., which will remove tariffs on most industrial goods imports from the U.S., is nearly finalized.
  • Vietnam's trade minister said that his country is willing to increase purchases of machinery and high-tech products from the U.S.
  • The Times Shadow Committee unanimously recommended that the Bank of England keep its bank rate at 3.75% tomorrow.
  • The European Central Bank is expected to leave its policy unchanged tomorrow.
  • China's January RatingDog Services PMI hit 52.3 (expected 52.0; last 52.0).
  • Japan's January Services PMI hit 53.7 (expected 53.4; last 51.6).
  • Hong Kong's January Manufacturing PMI hit 52.3 (last 51.9).
  • India's January Services PMI hit 58.5 (expected 59.3; last 58.0).
  • Australia's January Services PMI hit 56.3 (expected 56.0; last 51.1).
  • New Zealand's Q4 Employment increased by 0.5% qtr/qtr (expected 0.3%; last 0.0%), Q4 Unemployment Rate rose to 5.4% from 5.3% (expected 5.3%), Q4 Participation Rate rose to 70.5% from 70.3% (expected 70.3%). Q4 Labor Cost Index was up 0.4% qtr/qtr (expected 0.5%; last 0.5%), rising 2.0% yr/yr, as expected (last 2.1%).
  • Eurozone's January Services PMI hit 51.6 (expected 51.9; last 52.4). Flash January CPI was down 0.5% m/m (last 0.2%) but up 1.7% yr/yr, as expected (last 2.3%). January Core CPI was up 2.2% yr/yr (expected 2.3%; last 2.3%).
  • Germany's January Services PMI hit 52.4 (expected 53.3; last 52.7).
  • U.K.'s January Services PMI hit 54.0 (expected 54.3; last 51.4).
  • France's January Services PMI hit 48.4 (expected 47.9; last 50.1).
  • Italy's January Services PMI hit 52.9 (expected 51.3; last 51.5). Flash January CPI was up 0.4% m/m, as expected (last 0.2%), rising 1.0% yr/yr, as expected (last 1.2%).
  • Spain's January Services PMI hit 53.5 (expected 56.6; last 57.1).
• Commodities:
  • WTI Crude: +0.5% to $63.54/bbl
  • Gold: +2.9% to $5078.80/ozt
  • Copper: -1.2% to $6.017/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1823
  • GBP/USD: +0.2% to 1.3721
  • USD/CNH: +0.1% to 6.9372
  • USD/JPY: +0.6% to 156.62
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -8.9%; prior -8.5%)
  • 8:15 ET: January ADP Employment Change (Briefing.com consensus 43,000; prior 41,000)
  • 8:30 ET: Quarterly Refunding Statement from the U.S. Treasury
  • 9:45 ET: Final January S&P Global U.S. Services PMI (prior 52.5)
  • 10:00 ET: January ISM Non-Manufacturing Index (Briefing.com consensus 53.7%; prior 54.4%)
  • 10:30 ET: Weekly crude oil inventories (prior -2.30 mln)