Bonds Tumble as Data Improves

U.S. Treasuries stalled below the high yield/low price levels in the wake of the strong headline ADP private payrolls print, which was tempered somewhat by the steep downward back revision. Though the surge in oil prices boosted yields overnight with the apparent OPEC deal, month-end forces could cap the rise in yields for now with the big index extension into the close.

The long bond led the complex lower as equities rallied. A steep ascent in Treasury yields is pacing the weakness as the 10-year yield is over 8 basis points higher at 2.385%. Core European rates are only a couple of ticks higher, while the Japanese Government bonds closed up 1 bp at 0.013%.

Stocks are moving higher as oil prices rebound ahead of the OPEC statement, as there are reports that so far ministers are supporting a supply cut. WTI is testing $49 barrel, even as the dollar is a little firmer. European spreads have widened after stronger-than-expected German sales, employment and European HICP inflation data.

The U.S. calendar was heavy and showed an improved November ADP private payrolls, October personal income beat expectations while spending missed. The November Chicago purchasing managers’ index (PMI) showed an upside surprise. October pending home sales are due at 10 a.m. ET along with weekly oil inventories. Mortgage applications dropped 9.4%. The Federal Reserve will release the Beige Book for the December 13-14 Federal Open Market Committee meeting at 2 p.m.. Fedspeak includes Governor Jerome Powell and Cleveland’s Loretta Mester at 11:45 a.m. and 12:35 p.m., respectively. The earnings calendar features reports from PVH Corp., Royal Bank of Canada, and Synopsys.

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