Bond Traders Weekly Outlook: US Treasury Yields Surge After Blowout Jobs Report

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    Early Bonds: U.S. Treasuries lower start with belly early weakness.
    Spain’s flash CPI for January was hotter than expected.

    2-yr: +3 bps to 4.24%
    3-yr: +3 bps to 3.95%
    5-yr: +4 bps to 3.66%
    10-yr: +3 bps to 3.55%
    30-yr: +3 bps to 3.66%


    Early Bonds: U.S. Treasuries modestly higher after three days of losses.
    U.S. Dollar Index is up 0.2% at 102.46.

    2-yr: -2 bps to 4.24%
    3-yr: -1 bp to 3.94%
    5-yr: -4 bps to 3.64%
    10-yr: -3 bps to 3.52%
    30-yr: -2 bps to 3.64%

    The gains in Treasury futures took place alongside a weak showing from global equity markets after the release of a big batch of data. In Asia, China’s Manufacturing and Non-Manufacturing PMI readings returned into positive territory for the first time since September while Australia’s retail sales decreased for the first time in 12 months.

    In Europe, the eurozone’s GDP avoided a Q4 contraction by a slight margin, but Germany’s December retail sales and France’s December consumer spending were well below expectations.

    In other news, the International Monetary Fund raised its forecast for global growth in 2023 to 2.9% from 2.7% while cutting the outlook for 2024 to 3.1% from 3.2%.

    The U.S. session will feature the release of a few economic reports, including the Employment Cost Index for Q4 (consensus 1.1%; prior 1.2%) and Consumer Confidence for December (consensus 108.1; prior 108.3).


    U.S. Treasuries on track for a higher start with the long bond expected to pace the early advance.

    Treasury futures began rising last evening, continuing their push into the night. The market reached highs around 4:00 ET, followed by some backtracking in recent trade.

    Overnight action saw the release of final Manufacturing PMI readings from major economies.

    China’s Caixin Manufacturing PMI remained in contraction for the sixth consecutive month while Japan’s Manufacturing PMI contracted for the third month in a row. In Europe, Manufacturing PMI readings from Italy and France returned into expansionary territory while the reading for the eurozone remained below 50.0.

    The U.S. session will also feature a sizable batch of economic data, but the main focus will be on the FOMC announcement at 14:00 ET and Fed Chairman Powell’s press conference at 14:30 ET.

    Crude oil is building on yesterday’s advance

    U.S. Dollar Index is down 0.2% at 101.86.

    Yields Check:
    2-yr: -1 bp to 4.20%
    3-yr: -4 bps to 3.88%
    5-yr: -5 bps to 3.59%
    10-yr: -4 bps to 3.49%
    30-yr: -5 bps to 3.61%


    U.S. Treasuries modestly higher start while the long bond is expected to show slight relative weakness in the early going.

    The Hong Kong Monetary Authority followed the FOMC rate hike with its own 25 bps rate increase to 5.00%
    Bank of England raised its bank rate by 50 bps to 4.00% and hinted at a pause in hikes. The central bank believes that inflation in the U.K. and other economies has already peaked.
    The European Central Bank announced a 50 bps increase of its own.

    The U.S. session will feature a handful of reports, including the latest jobless claims data and preliminary productivity and unit labor cost figures for Q4.


    2-yr: -5 bps to 4.06%
    3-yr: -6 bps to 3.73%
    5-yr: -6 bps to 3.44%
    10-yr: -4 bps to 3.36%
    30-yr: -1 bp to 3.54%


    Friday was a day of reversal for all markets after the blowout jobs number. U.S. Treasury yields reversed sharply higher Friday, with two-year yields
    [See the full post at: Bond Traders Weekly Outlook: US Treasury Yields Surge After Blowout Jobs Report]

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