Bond Market Update

10-Yr Kissing 4.00%

• U.S. Treasuries saw a steady bid in the overnight trade that was aided by some market-friendly inflation reports out of New Zealand and the UK that sparked rate cut speculation. The 10-yr note yield, which hit 4.11% last week, is kissing 4.00% this morning ahead of the 8:30 a.m. ET release of the September Import-Export Price Index. The U.S. Dollar Index is flat at 103.26, as the euro sits tight in front of the ECB policy decision (and expected rate cut) on Thursday. The British pound (GBP/USD -0.3% to 1.3031) is losing ground on the BOE rate cut speculation.

• Yield check:
  • 2-yr: -3 bps to 3.92%
  • 3-yr: -3 bps to 3.83%
  • 5-yr: -3 bps to 3.83%
  • 10-yr: -4 bps to 4.00%
  • 30-yr: -4 bps to 4.29%
• News:
  • UK's September CPI 1.7% yr/yr (expected 1.9%; last 2.2%), driving BOE rate-cut speculation as it is below the 2% target for the first time since April 2021
  • UK Chancellor Reeves is pushing the need for tax increases and spending cuts to plug a GBP40 billion budget gap
  • China's Housing Ministry, along with the Ministry of Finance and PBOC, will hold a press briefing on Thursday to talk about property sector reforms
  • China said it wants a review of Intel (INTC) products sold in China, according to Reuters
  • BOJ member Adachi that the BOJ should "proceed cautiously" with policy adjustments, according to Bloomberg
  • The Bank of Thailand surprised with a 25 basis points cut in its one-day repurchase rate to 2.25%. That is the first cut since May 2020.
  • The Bank of Indonesia kept its main policy rate steady at 6.0%, as expected
  • The Philippines central bank cut its policy rate by 25 basis points, as expected, to 6.0%
  • Following a CPI report that showed inflation within the RBNZ's target band of 1-3% for the first time since 2021, chatter picked up that the RBNZ could institute a large rate cut at its November meeting
  • MBA Mortgage Applications Index -17.0% wk/wk (prior -5.1%) with refinance applications -26% and purchase applications -7%
• Commodities:
  • WTI crude: -0.4% to $70.27/bbl
  • Gold: +0.6% to $2694.70/ozt
  • Copper: +1.1% to $4.39/lb
• Currencies:
  • EUR/USD: flat at 1.0892
  • GBP/USD: -0.3% to 1.3031
  • USD/CNH: -0.2% to 7.1257
  • USD/JPY: +0.1% to 149.30
• The Day Ahead:
  • 08:30 ET: September Import Prices (Prior 0.8%) and Import Prices ex-oil (Prior -0.1%); September Export Prices (Prior-0.7%) and Export Prices ex-agricultural products (Prior -0.6%)