Bonds Trim Early Gains

U.S. Treasuries rallied pushing yields lower globally overnight, even as equities aimed higher, in part on hopes of further stimulus from the European Central Bank (ECB) Thursday. The U.K.Gilt is leading the move in core yields, down 4 basis points to 1.374%, while the Treasury note slid to near 2.36% from 2.39%. The FTSE is also pacing the rally in equities as Sterling has fallen to 1.2578. October production from the UK and Germany were a bit below expectations (though Germany has been showing a clear upward trajectory). In other news, Italy denied it asked for a EUR15 billion European Stability Mechanism (ESM) loan to help with struggling banks. Chinese foreign exchange reserves declined for a 5th straight month. Oil prices rebounded to $51.20.

The domestic calendar is light and includes October Job Openings and Labor Turnover Survey (JOLTS) at 10 a.m. ET and October consumer credit at 3 p.m. The Mortgage Bankers’ Association reported mortgage applications dipped another 0.7% in the week ended December 2, after plunging 9.4% in the prior week. Federal Reserve officials remain off the calendar during the “blackout” period ahead of the Dec. 13 – 14 policy meeting. The earnings calendar is light, and features reports from Costco, H&R Block, and lululemon.

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