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[Swap Market Opens with Slight Divergence; Funds Await Direction Ahead of GDP and PCE Data] ⑴ The swap market opened with divergence on Friday, with spreads across maturities fluctuating only slightly, consistent with cautious trading in US Treasuries ahead of key data releases. This week's $30.1 billion supply of investment-grade corporate bonds was successfully absorbed, slightly below the expected lower limit of $30-40 billion, providing a stable foundation for the market. ⑵ Overnight fund flows were extremely thin and directionless, largely seen as position adjustments ahead of the release of Q4 GDP and core PCE data. Absolute yields hovered within a narrow range, the yield curve remained flat, money market rates rose slightly, SOFR futures showed mixed movements, and swap spreads remained largely unchanged overall. ⑶ Swap spreads changed minimally. The 2-year swap was at -18.0 basis points, narrowing by 0.2 basis points from the previous day; the 10-year swap was at -41.5 basis points, widening by 0.3 basis points; and the 30-year swap was at -70.75 basis points, narrowing slightly by 0.05 basis points. The yield curve exhibited a parallel shift, with changes across maturities generally consistent. (4) US Treasury yields declined slightly, and the curve remained parallel. During the Tokyo session, while Japanese bonds rose due to core CPI falling to a two-year low, US Treasuries retreated. Entering London trading, US Treasuries rebounded from their lows, driven by spillover effects from buying European and British bonds. Traders were more focused on geopolitical anxieties stemming from escalating US-Iran tensions than on strong economic data. (5) European bond yields retested recent lows. Stronger-than-expected Eurozone and German PMIs were offset by slower wage growth in the Eurozone, and news of Lagarde's planned completion of her term also provided reassurance to the market. British bonds also declined, with the 5-year yield falling to its lowest level since September 2024. Despite strong UK PMIs and retail sales, the record public sector surplus in January suggested easing pressure on government bond issuance, attracting more market attention. (6) As of press time, the 2-year US Treasury yield was 3.465%, down 0.5 basis points from the previous day; the 10-year yield was 4.067%, down 0.8 basis points; and the 30-year yield was 4.700%, down 0.4 basis points. On the yield curve, the spread between the 2-year and 10-year yields was 60.23 basis points, narrowing by 0.27 basis points from the previous day; the spread between the 5-year and 30-year yields was 106.0 basis points, widening by 0.3 basis points. (7) European stocks and US stock index futures rose slightly, with risk appetite remaining cautious ahead of geopolitical tensions and key data releases. The US-Iran situation pushed oil prices strong, while the dollar and gold remained firm. Spot gold rose 0.7% to $5032.49. The dollar index fell slightly by 0.05% to 97.872, but is on track for its biggest weekly gain since October. Brent crude fell 0.21% to $71.49, but is on track for its first weekly gain in three weeks.