Holiday trading is light combined with policy concerns, and the year-end gains of U.S. Treasuries are likely to be fully reversed
The holiday trading is light and concerns over policies are intensifying, leading to a risk of correction in the U.S. Treasury market, which may erase the gains made in early 2024. The Bloomberg U.S. Treasury Index has declined by about 1.7% this month, with an expected annual gain of only 0.4%. This week, there are few economic data releases, and investors are focused on the upcoming PMI, housing price index, and unemployment claims data. The Federal Reserve's speaking schedule is also nearly empty, and the market will pause trading during the New Year's holiday
According to the Zhitong Finance APP, bond investors are entering a trading week shortened by holidays, with few economic data releases and almost no scheduled speeches from the Federal Reserve. Against this backdrop, concerns are growing over President Trump's policy agenda and the limited space for interest rate cuts next year, leading to a risk of correction in the U.S. Treasury market, which may erase the slight gains seen in early 2024. As of December 26, the Bloomberg U.S. Treasury Index has declined by about 1.7% this month, with the annual gain expected to remain at a low of only 0.4%, and the U.S. market will pause trading due to the New Year's Day holiday on Wednesday.
Highlights of economic data releases this week include: the U.S. Chicago PMI for December, the month-on-month change in the November existing home sales index, and the December Dallas Fed business activity index to be released on December 30; on December 31, investors will focus on the U.S. FHFA house price index month-on-month change for October, the year-on-year change in the S&P/CS 20-City Composite Home Price Index, and the December Dallas Fed services revenue index.
Entering the new year, on January 2, the U.S. MBA mortgage application activity index as of December 20, the number of initial unemployment claims as of December 28 (in ten thousand), and the December ISM manufacturing PMI will be released; on January 3, the December ISM manufacturing PMI will be announced again. As for the Federal Reserve's dynamics, only Richmond Fed President Barkin is scheduled to speak on January 3