Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market. Treasury futures climbed at a slow pace through the first half of the night but found resistance as the focus turned to action in Europe, trimming their gains. Equity markets in Asia had a mostly subdued showing while China's Shanghai Composite (+2.9%) outperformed notably. Elsewhere, Japan will hold a general election on Sunday and there is a risk that Prime Minister Ishiba's party could lose control of parliament. In Europe, the latest business survey from Germany's ifo Institute reported no improvement in orders and called for more rate cuts from the ECB. Crude oil is looking to recover yesterday's loss while the U.S. Dollar Index is down 0.1% at 104.01.
• Yield Check:
  • 2-yr: -2 bps to 4.05%
  • 3-yr: -2 bps to 3.99%
  • 5-yr: -2 bps to 4.00%
  • 10-yr: -1 bp to 4.19%
  • 30-yr: -1 bp to 4.46%

• News:
  • The People's Bank of China left its medium-term lending facility rate at 2.0%.
  • Reserve Bank of Australia Governor Bullock said that inflation will need another year or two to return to target.
  • China's agriculture ministry expects a bumper grain harvest this fall.
  • Chinese automakers have reportedly been instructed to stop expansion into the EU due to the ongoing tariff dispute.
  • European Central Bank Chief Economist Lane said that the disinflation process is on track, expected to reach target in 2025.
  • The U.K.'s Autumn Budget Statement will be presented on October 30 and there is speculation that capital gains taxes could be increased.
  • China's September FDI was down 30.4% YTD (last -31.5%).
  • Japan's October Tokyo CPI was up 1.8% yr/yr (last 2.1%) and Tokyo Core CPI was also up 1.8% yr/yr (expected 1.7%; last 2.0%). October Corporate Services Price Index was up 2.6% yr/yr (expected 2.7%; last 2.7%). August Leading Index hit 106.9 (expected 106.7; last 109.3) and Coincident Indicator was down 3.2% m/m (expected -3.7%; last 3.1%).
  • Singapore's Q3 URA Property Index was down 0.7% qtr/qtr (expected -1.1%; last -1.1%). September Industrial Production was unchanged m/m (expected -2.8%; last 6.9%), rising 9.8% yr/yr (expected 3.5%; last 22.0%).
  • Eurozone's September M3 Money Supply was up 3.2% yr/yr (expected 2.9%; last 2.9%). September Private Sector Loans were up 0.7% yr/yr (expected 0.8%; last 0.6%) and loans to nonfinancials rose 1.1% (last 0.8%).
  • Germany's October ifo Business Climate Index hit 86.5 (expected 85.6; last 85.4). October Current Assessment rose to 85.7 from 84.4 (expected 84.4) and Business Expectations rose to 87.3 from 86.4 (expected 86.8).
  • France's October Consumer Confidence fell to 94 from 95, as expected.
  • Italy's October Business Confidence fell to 85.8 from 86.6 (expected 87.0) and Consumer Confidence fell to 97.4 from 98.3 (expected 98.5).
  • Spain's September PPI was down 5.2% yr/yr (last -1.3%). Q3 Unemployment Rate dipped to 11.21% from 11.27% (expected 11.40%).
• Commodities:
  • WTI Crude: +0.8% to $70.72/bbl
  • Gold: -0.3% to $2740.40/ozt
  • Copper: -0.2% to 4.342/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0823
  • GBP/USD: +0.1% to 1.2965
  • USD/CNH: +0.2% to 7.1336
  • USD/JPY: UNCH at 151.80
• Data out Today:
  • 8:30 ET: September Durable Orders (Briefing.com consensus -0.9%; prior 0.0%) and Durable Orders ex-transport (Briefing.com consensus -0.1%; prior 0.5%)
  • 10:00 ET: Final October University of Michigan Consumer Sentiment (Briefing.com consensus 68.9; prior 68.9)