Bond Market Update

 Bounce Extended

• U.S. Treasuries are on track for an extension of yesterday's intraday bounce with longer tenors expected to pace the early advance after a busy night. Treasury futures inched higher during the early portion of the night, accelerating their rally once the focus shifted to action in Europe, where the market has seen the release of Germany's flash GDP for Q4 (0.2%; expected -0.1%), which showed slight unexpected growth while regional CPI readings accelerated in October. Germany's full CPI report will be released at 9:00 ET and is expected to show an acceleration to 1.8% from 1.6% in the yr/yr rate. On a separate note, the U.K.'s Autumn Budget Statement, which is expected to include tax hikes, will take place at 8:30 ET. The U.S. session will also feature the advance reading of Q3 GDP (Briefing.com consensus 3.0%), followed by Pending Home Sales (Briefing.com consensus 2.5%; prior 0.6%) for September. Crude oil is fighting to reclaim yesterday's loss while the U.S. Dollar Index is flat at 104.28.
• Yield Check:
  • 2-yr: -3 bps to 4.09%
  • 3-yr: -4 bps to 4.04%
  • 5-yr: -3 bps to 4.07%
  • 10-yr: -4 bps to 4.23%
  • 30-yr: -4 bps to 4.48%

• News:
  • The EU announced new tariffs on electric vehicle imports from China. 
  • China's National People's Congress is expected to approve next week the issuance of more than CNY10 trln of extra debt over the next few years.
  • There is growing speculation that Germany's ruling coalition will not survive a full term, resulting in elections in early 2025.
  • Japan's October Household Confidence fell to 36.2 from 36.9 (expected 36.7).
  • Australia's Q3 CPI was up 0.2% qtr/qtr (expected 0.3%; last 1.0%), rising 2.8% yr/yr (expected 2.3%; last 3.8%).
  • Singapore's September Bank Lending reached SGD808.8 bln (last SGD800.0 bln). Q3 Business Expectations fell to 10.0 from 23.0.
  • Eurozone's Q3 GDP grew 0.4% qtr/qtr (expected 0.2%; last 0.2%), expanding 0.9% yr/yr (expected 0.8%; last 0.6%). October Business and Consumer Survey fell to 95.6 from 96.3 (expected 96.3).
  • Germany's Q3 GDP expanded 0.2% qtr/qtr (expected -0.1%; last -0.1%) but was down 0.2% yr/yr (expected -0.3%; last 0.0%). October Unemployment increased by 27,000 (expected 15,000; last 17,000) and Unemployment Rate rose to 6.1% from 6.0%, as expected.
  • France's Q3 GDP grew 0.4% qtr/qtr (expected 0.3%; last 0.2%), expanding 1.3% yr/yr (last 1.0%). September Consumer Spending was up 0.1% m/m (expected 0.1%; last 0.4%).
  • Italy's Q3 GDP was unchanged qtr/qtr (expected 0.2%; last 0.2%), rising 0.4% yr/yr (expected 0.7%; last 0.6%).
  • Spain's October CPI was up 0.6% m/m (expected 0.5%; last -0.6%), rising 1.8% yr/yr (expected 1.7%; last 1.5%). October Core CPI was up 2.5% yr/yr (last 2.4%). Q3 GDP expanded 0.8% qtr/qtr (expected 0.6%; last 0.8%), growing 3.4% yr/yr (expected 3.0%; last 3.2%).
  • Swiss October KOF Leading Indicators fell to 99.5 from 104.5 (expected 105.1). October ZEW Expectations ticked up to -7.7 from -8.8.
• Commodities:
  • WTI Crude: +1.2% to $68.02/bbl
  • Gold: +0.4% to $2791.50/ozt
  • Copper: -0.5% to $4.337/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0825
  • GBP/USD: -0.3% to 1.2968
  • USD/CNH: -0.1% to 7.1360
  • USD/JPY: -0.2% to 153.09
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -0.1%; prior -6.7%)
  • 8:15 ET: October ADP Employment Change (Briefing.com consensus 105,000; prior 143,000)
  • 8:30 ET: Advance Q3 GDP (Briefing.com consensus 3.0%; prior 3.0%), advance Q3 GDP Chain Deflator (Briefing.com consensus 2.3%; prior 2.5%)
  • 10:00 ET: September Pending Home Sales (Briefing.com consensus 2.5%; prior 0.6%)
  • 10:30 ET: Weekly crude oil inventories (prior +5.47 mln)