Bond Market Update

Waiting on Thursday

• U.S. Treasuries meandered through a largely uneventful session, outside of the 10-yr note yield making a brief foray below 4.00%. The operative word there is "brief." Meeting with resistance, the 10-yr yield quickly popped back above 4.00% and settled the cash session at 4.02%. There were modest gains across the curve, which were achieved before the cash open, as the futures trade responded to some market-friendly inflation data out of the UK and New Zealand. There was a little bit of volatility following the generally pleasing release of the September import-export price indexes at 8:30 a.m. ET, yet conviction was lacking throughout the session with participants eyeing the ECB policy decision and a heavy slate of economic releases, which includes initial jobless claims and September Retail Sales, on Thursday. The U.S. Dollar Index was up 0.3% to 103.60 with the greenback showing some strength against the euro, British pound, and yen.

• 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: -2 bps to 4.02%
  • 30-yr: -3 bps to 4.30%
• 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%
• Today's Data:
  • Import prices declined 0.4% month-over-month in September following a 0.2% decline in August. Excluding fuel, import prices were up 0.1% month-over-month for the third straight month. On a year-over-year basis, import prices were down 0.1% while import prices excluding fuel were up 1.8%.
  • Export prices fell 0.7% month-over-month in September following a 0.9% decline in August. Excluding agricultural products, export prices were down 0.9% month-over-month following a 0.7% decline in August. Export prices were down 2.1% year-over-year while export prices excluding agricultural products were down 1.8%.
• Commodities:
  • WTI crude: -0.4% to $70.36/bbl
  • Gold: +0.5% to $2691.30/ozt
  • Copper: +0.9% to $4.37/lb
• Currencies:
  • EUR/USD: -0.3% to 1.0855
  • GBP/USD: -0.7% to 1.2983
  • USD/CNH: flat at 7.1372
  • USD/JPY: +0.4% to 149.77
• The Day Ahead:
  • 08:15 ET: ECB Policy Decision
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus 270K; prior 258K) and Continuing Jobless Claims (Prior 1861K)
  • 08:30 ET: September Retail Sales (Briefing.com consensus 0.2%; prior 0.1%) and Retail Sales Ex-Auto (Briefing.com consensus 0.1%; prior 0.1%)
  • 08:30 ET: October Philadelphia Fed Index (Briefing.com consensus 4.0; prior 1.7)
  • 09:15 ET: September Industrial Production (Briefing.com consensus -0.1%; prior 0.8%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 78.0%)
  • 10:00 ET: August Business Inventories (Briefing.com consensus 0.3%; prior 0.4%)
  • 10:00 ET: October NAHB Housing Market Index (Briefing.com consensus 43; prior 41)
  • 10:30 ET: EIA Natural Gas Inventories (Prior +82 bcf)
  • 11:00 ET: EIA Crude Oil Inventories (Prior +5.81M)
  • 16:00 ET: August Net Long-Term TIC Flows (Prior $135.4B)