Bond Market Update

Belly Lags

• U.S. Treasuries are on track for a mostly lower start with the belly of the curve expected to show slight relative weakness in the early going. Treasury futures followed yesterday's slide to fresh October lows with a sideways start to the night that gave way to some more selling. The losses took place alongside weakness in other sovereign debt while European equity markets have also faced some pressure. Thanks to the recent selling, Bank of America's MOVE Index has risen to its highest level of the year, reflecting elevated volatility. Overnight action featured more speculation about China's stimulus plans while the data flow was somewhat subdued. Quarterly earnings have been in focus with shipping giant Maersk reporting above-consensus preliminary results for Q3 and raising its guidance, including its container market outlook. The market will not receive any data during the U.S. session. Crude oil is building on yesterday's bounce off its lowest level since the start of October while the U.S. Dollar Index is down 0.1% at 103.94.
• Yield Check:
  • 2-yr: +2 bps to 4.05%
  • 3-yr: +3 bps to 3.98%
  • 5-yr: +2 bps to 4.00%
  • 10-yr: +2 bps to 4.20%
  • 30-yr: UNCH at 4.49%

• News:
  • An adviser with China's Academy of Social Sciences speculated that the country's government could issue CNY12 trln of debt to stimulate the economy in 2025.
  • Chinese press reported that majority of companies listed in China saw positive profits in Q3.
  • Press reports from Australia noted a record number of insolvencies in Q3, as they grew 10% qtr/qtr, which was up 46% yr/yr.
  • German Chancellor Scholz repeated his opposition to imposing new tariffs on electric vehicle imports from China.
  • Japan's August BoJ Core CPI was up 1.7% yr/yr (last 1.8%).
  • South Korea's September PPI was down 0.2% m/m (last -0.2%) but up 1.0% yr/yr (last 1.6%).
  • Hong Kong's September CPI was up 0.1% m/m (last 0.0%), rising 2.2% yr/yr (expected 2.4%; last 2.5%).
  • New Zealand's September trade deficit reached NZD2.11 bln (last deficit of NZD2.31 bln).
  • U.K.'s September Public Sector Net Borrowing reached GBP16.61 bln (expected GBP17.4 bln; last GBP13.02 bln).
• Commodities:
  • WTI Crude: +1.0% to $71.24/bbl
  • Gold: +0.2% to $2745.60/ozt
  • Copper: +0.8% to $4.396/lb
• Currencies:
  • EUR/USD: UNCH at 1.0818
  • GBP/USD: UNCH at 1.2979
  • USD/CNH: UNCH at 7.1333
  • USD/JPY: +0.1% to 150.86
• No Data on Today's Schedule