Bond Market Update

Early Gains Maintained

• U.S. Treasuries trade on their highs after extending their opening gains with longer tenors maintaining their lead. Treasuries lurched to fresh highs amid reports that the White House is concerned about the potential for Iran carrying out a direct attack against Israel after Israel wiped out Hezbollah's leadership in recent days. In addition to boosting Treasuries, the news gave a jolt to crude oil futures while weighing on equities. Treasuries added to their gains in recent trade, responding to today's second batch of data, which showed a contractionary reading of the ISM Manufacturing PMI (47.2%; Briefing.com consensus 47.2%), a weaker than expected Construction Spending report for August (-0.1%; Briefing.com consensus 0.1%; prior -0.3%), and an increase in August job openings (to 8.040 mln from 7.711 mln). Equities are off to a weak start with the S&P 500 (-1.1%) staying a bit ahead of the Nasdaq (-1.5%).
• Yield Check:
  • 2-yr: -7 bps to 3.58%
  • 3-yr: -9 bps to 3.48%
  • 5-yr: -10 bps to 3.48%
  • 10-yr: -10 bps to 3.70%
  • 30-yr: -10 bps to 4.04%