Bond Market Update

Short End Sliding Ahead of Jobs Report

• U.S. Treasuries are on track for a lower start with shorter tenors expected to pace the early selling. Treasury futures spent the bulk of the night in a sideways range, slipping to lows once the focus turned to action in Europe, where equities are on the rise while sovereign debt is under some pressure with British gilt yields remaining at their highest levels of the year following this week's tax hike announcement. Trading volume, however, is on the light side due to All Saints' Day. The U.S. session is setting up for a busy start with the Employment Situation report for October (Briefing.com consensus 120,000; prior 254,000) set to be released at 8:30 ET. Crude oil remains above $70/bbl after yesterday's report from Axios that Iran is preparing a retaliatory strike against Israel from Iraqi territory. The U.S. Dollar Index is up 0.1% at 104.05.
• Yield Check:
  • 2-yr: +3 bps to 4.19%
  • 3-yr: +3 bps to 4.16%
  • 5-yr: +2 bps to 4.17%
  • 10-yr: +1 bp to 4.29%
  • 30-yr: UNCH at 4.47%

• News:
  • China's National People's Congress will be held next week.
  • Bank of Japan Governor Ueda said that the timing of the next rate hike has not been determined and that the market is regaining stability despite ongoing uncertainties.
  • China's October Caixin Manufacturing PMI hit 50.3 (expected 49.7; last 49.3).
  • Japan's October Manufacturing PMI hit 49.2 (expected 49.0; last 49.7).
  • South Korea's October trade surplus reached $3.17 bln (expected surplus of $4.23 bln; last surplus of $6.66 bln) as imports rose 1.7% yr/yr (expected 2.0%; last 2.2%) and exports rose 4.6% yr/yr (expected 6.9%; last 7.5%). October Manufacturing PMI hit 48.3 (last 48.3).
  • Hong Kong's September Retail Sales fell 6.9% yr/yr (last -10.1%).
  • Australia's October Manufacturing PMI hit 47.3 (expected 46.6; last 46.7). Q3 PPI was up 0.9% qtr/qtr (expected 0.7%; last 1.0%), rising 3.9% yr/yr (last 4.8%). October Commodity Prices were down 7.8% yr/yr (last -10.8%). September Home Loans ticked up 0.1% m/m (last 2.4%) and Invest Housing Finance fell 1.0% m/m (last 1.8%).
  • New Zealand's September Building Consents were up 2.6% m/m (last -5.2%).
  • U.K.'s October Nationwide HPI was up 0.1% m/m (expected 0.3%; last 0.6%), rising 2.4% yr/yr (expected 2.8%; last 3.2%). October Manufacturing PMI hit 49.9 (expected 50.3; last 51.5).
  • Swiss October CPI was down 0.1% m/m (expected 0.0%; last -0.3%) but up 0.6% yr/yr (expected 0.8%; last 0.8%). September Retail Sales were up 2.2% yr/yr (expected 2.5%; last 2.7%). October procure.ch PMI hit 49.9 (expected 49.5; last 49.9).
• Commodities:
  • WTI Crude: +2.2% to $70.78/bbl
  • Gold: +0.5% to $2763.00/ozt
  • Copper: +0.4% to $4.359/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0869
  • GBP/USD: +0.2% to 1.2919
  • USD/CNH: +0.1% to 7.1244
  • USD/JPY: +0.4% to 152.67
• Data out Today:
  • 8:30 ET: October Nonfarm Payrolls (Briefing.com consensus 120,000; prior 254,000), Nonfarm Private Payrolls (Briefing.com consensus 105,000; prior 223,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.1%; prior 4.1%), and Average Workweek (Briefing.com consensus 34.2; prior 34.2)
  • 9:45 ET: Final October S&P Global U.S. Manufacturing PMI (prior 47.8)
  • 10:00 ET: September Construction Spending (Briefing.com consensus 0.0%; prior -0.1%) and October ISM Manufacturing Index (Briefing.com consensus 47.6%; prior 47.2%)