Bond Market Update

Data on Tap

• The 10-yr note yield briefly traded below 4.00%, but quickly ran into resistance and now sits just above the 4-handle. Overall, the curve is still sticking to a tight trading range.
• Trading conviction has been tempered by Thursday's heavy lineup of economic data that includes August business inventories, weekly initial jobless claims, September retail sales, September industrial production, and the Philadelphia Fed Index and NAHB Housing Market Index for October, which will serve as trading catalysts individually and collectively.
• Thursday's session will also feature the ECB policy decision. The deposit rate, marginal lending facility rate, and main refinancing operations rate are all expected to be cut by 25 basis points.
• The CPI report for September out of the UK fueled expectations for the Bank of England to cut rates at its November policy meeting. CPI was up 1.7% yr/yr, which was the first move below the 2% target since April 2021.
• Yield check:
  • 2-yr: -1 bp to 3.94%
  • 3-yr: -1 bp to 3.85%
  • 5-yr: -2 bps to 3.84%
  • 10-yr: -3 bps to 4.01%
  • 30-yr: -3 bps to 4.30%