Bond Market Update

Lower Start Ahead of September Jobs Report

• U.S. Treasuries are on track for a modestly lower start, but they are likely to face some early volatility once the market receives the Employment Situation report for September (135,000; Briefing.com consensus 142,000) at 8:30 ET. Treasury futures spent the bulk of the night in a sideways range, but slid to lows once the focus turned to action in Europe. Markets in China remained closed for a holiday, but HSBC expects a large fiscal stimulus announcement to be made early next week. In Europe, Germany voted against new tariffs on electric vehicle imports from China to the EU while France, Italy, Greece, and Portugal voted in favor, though a final decision will not be made until early November. Domestically, the dockworker strike was suspended until mid-January after a tentative agreement to raise pay by 61.5% over six years. Crude oil is adding to this week's rally while the U.S. Dollar Index is down 0.2% at 101.84.
• Yield Check:
  • 2-yr: +2 bps to 3.73%
  • 3-yr: +2 bps to 3.65%
  • 5-yr: +1 bp to 3.65%
  • 10-yr: +1 bp to 3.86%
  • 30-yr: +1 bp to 4.19%

• News:
  • Former Bank of Japan policymaker Masaka said that the central bank will continue looking for the right time for the next rate hike.
  • Italy's Finance Minister Giorgetti said that the government is planning a windfall levy on corporations to reduce the budget deficit and that a 1.0% growth target for this year is realistic.
  • India's September Services PMI hit 57.7 (expected 58.9; last 60.9).
  • Singapore's August Retail Sales rose 0.7% m/m (last 3.1%), increasing 0.6% yr/yr (last 1.0%).
  • Hong Kong's September Manufacturing PMI hit 50.0 (last 49.4).
  • Australia's August Home Loans were up 0.7% m/m (last 2.5%) and August Invest Housing Finance was up 1.4% m/m (last 5.1%).
  • U.K.'s Q2 Housing Equity Withdrawal was down GBP14.7 bln (expected -GBP20.3 bln; last -GBP23.0 bln).
  • France's August Industrial Production was up 1.4% m/m (expected 0.3%; last 0.2%).
  • Italy's August Retail Sales were down 0.5% m/m (expected 0.2%; last 0.5%) but up 0.8% yr/yr (last 0.9%). Q2 Public Deficit decreased to 3.4% from 8.4%.
  • Spain's August Industrial Production was down 0.1% m/m (expected 0.1%; last -0.4%).
  • Swiss September Unemployment Rate rose to 2.6% from 2.5%, as expected.
• Commodities:
  • WTI Crude: +1.5% to $74.80/bbl
  • Gold: +0.1% to $2681.90/ozt
  • Copper: +0.3% to $4.568/lb
• Currencies:
  • EUR/USD: UNCH at 1.1032
  • GBP/USD: +0.4% to 1.3168
  • USD/CNH: +0.2% to 7.0650 
  • USD/JPY: -0.1% to 146.59
• Data out Today:
  • 8:30 ET: September Nonfarm Payrolls (Briefing.com consensus 135,000; prior 142,000), Nonfarm Private Payrolls (Briefing.com consensus 125,000; prior 118,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.2%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)