Bond Market Update

Still Pressured

• U.S. Treasuries are on track for a continuation of their recent retreat, which has lifted yields to levels last seen in late July. Treasury futures began slipping in early evening action, reaching lows near the end of the Asian session. A brief rebound at the start of European trade was followed by a return to lows, but recent action has seen some renewed buying that has lifted the Treasury complex toward levels from early evening. Stimulus talk continued swirling about in Asia, as a Chinese think tank opined that CNY2 trln worth of special government bonds should be issued to create a market stabilization fund. The International Monetary Fund lowered its global growth forecast for FY24 to 3.2% from 3.3% but the forecast for the U.S. was increased to 2.8% from 2.6%. The market will receive the Existing Home Sales report for September (Briefing.com consensus 3.90 mln; prior 3.86 mln) at 10:00 ET and the U.S. Treasury will hold a $13 bln 20-yr bond reopening this afternoon. Crude oil is giving back yesterday's gain while the U.S. Dollar Index is up 0.4% at 104.48 and gold futures are extending to another record high.
• Yield Check:
  • 2-yr: +1 bp to 4.05%
  • 3-yr: +2 bps to 4.00%
  • 5-yr: +2 bps to 4.03%
  • 10-yr: +3 bps to 4.23%
  • 30-yr: +3 bps to 4.52%

• News:
  • The IMF lowered its FY24 growth forecast for China to 4.8% from 5.0% while Japan's forecast was reduced to 0.3% from 0.7%. The FY24 forecast for the U.K. was raised to 1.1% from 0.7%.
  • China Securities Daily noted that about 500 domestic companies have announced buybacks over the past month.
  • South Korea is reportedly looking to provide support to chipmakers.
  • European Central Bank policymaker Villeroy de Galhau said that persistent inflation is no longer the only risk and that the risk of reducing rates too late could increase.
  • European Central Bank policymaker Patsalides said that the debate is starting about the current level of rates relative to the neutral level. · Deutsche Bank reported a Q3 profit but also increased its provision for credit losses.
  • L'Oreal reported weak results for Q3 due in part to sluggish demand from China.
  • South Korea's October Consumer Confidence hit 101.7 (last 100.0).
  • Singapore's September CPI was up 0.3% m/m (last 0.7%), rising 2.0% yr/yr (expected 1.9%; last 2.2%). September Core CPI was up 2.8 yr/yr (expected 2.7%; last 2.7%).
• Commodities:
  • WTI Crude: -1.8% to $70.43/bbl
  • Gold: +0.2% to $2765.40/ozt
  • Copper: -1.2% to $4.33/lb
• Currencies:
  • EUR/USD: -0.3% to 1.0764
  • GBP/USD: -0.3% to 1.2947
  • USD/CNH: +0.1% to 7.1426
  • USD/JPY: +1.4% to 153.04
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -6.7%; prior -17.0%)
  • 10:00 ET: September Existing Home Sales (Briefing.com consensus 3.90 mln; prior 3.86 mln)
  • 10:30 ET: Weekly crude oil inventories (prior -2.19 mln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results