POLITICAL RISK: Trump-Anything Less Than Greenland In US Hands 'Unacceptable'

Treasuries are modestly firmer as they pare Friday’s gains by differing amounts, helped by some outperformance of EGBs plus softer crude oil futures. Today sees remarks from NY Fed’s Williams in focus but with NFP/retail sales tomorrow and CPI on Thursday looming large.

• Cash yields are 1-2.2.1bp lower on the day, with the front-end lagging declines.
• Curves remain close to recent steeps, with 5s30s at 110.3bps off Friday’s circa three-month high of 111.8bp.
• TYH6 trades at 112-11+ (+06+) as it holds steady gains seen ahead of London hours, on thin cumulative volumes of 210k.
• A bear threat remains present, with Friday’s 112-03+ coming close to a bear trigger at 111-29 (Dec 10 low). Resistance meanwhile is seen at 112-21 (20-day EMA and 112-23 (Dec 11 high).
• Data: Empire Mfg Dec (0830ET), NAHB housing market index Dec (1000ET)
• Fedspeak: Miran on inflation outlook (0930ET), Williams keynote remarks (1030ET), Miran on CNBC (1100ET)
• Bill issuance: US Tsy $86B 13W & $77B 26W bill auctions (1130ET)
• Politics: Trump in Mexican Boarder Defense Medal Presentation (1500ET), Trump in Christmas receptions (1615ET & 2015ET)

• In FX, gains in EURUSD last week reinforces a bull theme and the pair is trading closer to its recent highs. The recent breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger, highlights a stronger reversal. Sights are on 1.1779 next, the October 1 high. Initial support to watch is 1.1638, the 20-day EMA and a pivot level.
• A fresh short-term cycle high last week in GBPUSD confirmed a resumption of the current bull leg. Scope is seen for a climb towards 1.3452 next, 61.8% of the Sep 17 - Nov 4 bear leg. Clearance of this hurdle would strengthen a bull theme and open 1.3527, the Oct 1 high. Initial firm support is seen at 1.3277, the 20-day EMA.
• The trend condition in USDJPY is bullish and the move down between Nov 20 - Dec 5 appears to have been a correction. Furthermore, the recovery from the Dec 5 low highlights the end of the corrective phase. However, the latest retracement exposes support at 153.95, the 50-day EMA. A clear breach of this average would undermine the bull theme and signal scope for a deeper retracement. For bulls, a resumption of gains would open 158.00.

• US Data/Speaker Calendar (prior, estimate). All times ET
• 12/15 0830 Empire Manufacturing (18.7, 10.0)
• 12/15 0930 Fed Gov Miran inflation outlook
• 12/15 1000 NAHB Housing Market Index (38, 39)
• 12/15 1030 NY Fed Williams keynote remarks
• 12/15 1100 Fed Gov Miran on CNBC
• 12/15 1130 US Tsy $86B 13W & $77B 26W bill auctions
• Source: Bloomberg Finance L.P. / MNI