Changes in Venezuela triggered oil prices to dive, and US debt rebounded across the board after concerns about inflation eased

The Zhitong Finance App notes that US debt is expected to rise for the first time in a week. Earlier, the US military's arrest of Venezuelan President Nicolas Maduro caused oil prices to fall, easing market concerns about continued inflation.

The 10-year US Treasury yield fell 2 basis points to 4.17%, while the 2-year US Treasury yield, which is more sensitive to monetary policy, fell 1 basis point to 3.46%. The money market has fully absorbed the expectation that the Federal Reserve will cut borrowing costs by 25 basis points twice this year, and believes that the possibility of cutting interest rates for the third time is about 25%.

Most global bonds rose on Monday as markets feared a drop in crude oil futures prices due to global oversupply. Even if Venezuela resumes oil production in the future, it will only make up for the sharp drop in production capacity over the past 20 years, and this year, as OPEC+ and other oil producers continue to increase production, the market will still face huge surpluses.

Although heightened geopolitical concerns usually spur demand for safe-haven assets such as US bonds, US stock index futures rose on Monday, driven by rising technology stocks. The performance of US debt also lags behind swaps, which indicates a rebound in risk appetite.

Deutsche Bank strategist Henry Allen and his team said, “Historically, geopolitical shocks often don't have a lasting impact.” “This may seem surprising, but this is because markets usually trade based on macro-variables such as growth and inflation, rather than geopolitical shocks themselves.”

Ahead of Friday's key employment report, traders will now focus on the US ISM manufacturing data for December released late Monday to find the latest clues about the health of the economy.