Bond Market Update

October CPI Ahead

• U.S. Treasuries are on track for a modestly higher start in longer tenors and some relative weakness up front, ahead of the 8:30 ET release of October CPI (Briefing.com consensus 0.2%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%). Treasury futures faced some pressure during the Asian session but recovered their losses shortly after the focus turned to action in Europe. The overnight data flow was limited, but Japan saw its PPI accelerate to 3.4% yr/yr, which was the fastest pace since mid-2023 due to the impact of wage hikes. In Europe, France's parliament rejected the budget proposal for 2025, returning the debate to the Senate. Separately, European Central Bank policymaker Nagel expressed concern that new tariffs from the Trump administration could reduce Germany's GDP by a full percentage point. Crude oil holds a modest gain while the U.S. Dollar Index is down 0.1% at 105.92.
• Yield Check:
  • 2-yr: +1 bp to 4.35%
  • 3-yr: UNCH at 4.31%
  • 5-yr: UNCH at 4.31%
  • 10-yr: -1 bp to 4.42%
  • 30-yr: -2 bps to 4.56%

• News:
  • China Securities Times reported that the details of the tax cut on home purchases will be released by the end of the year.
  • China will extend the Spring Festival and May Day holidays by one day apiece.
  • The French parliament rejected the budget bill for 2025, sending it back to the Senate for revisions.
  • Japan's October PPI was up 0.2% m/m (expected 0.0%; last 0.3%), rising 3.4% yr/yr (expected 2.9%; last 3.1%).
  • South Korea's October Import Price Index was down 2.5% yr/yr (last -3.7%) and Export Price Index was up 2.0% yr/yr (last 1.0%). October Unemployment Rate rose to 2.7% from 2.5%.
  • Australia's Q3 Wage Price Index was up 0.8% qtr/qtr (expected 0.9%; last 0.8%), rising 3.5% yr/yr (expected 3.6%; last 4.1%).
  • New Zealand's September Visitor Arrivals rose 1.1% m/m (last -2.1%).
  • France's Q3 Unemployment Rate rose to 7.4% from 7.3%, as expected. Bank of France Governor Villeroy de Galhau expects the rate to continue growing to 8.0% before returning to 7.0%.
• Commodities:
  • WTI Crude: +0.3% to $68.34/bbl
  • Gold: +0.4% to $2616.60/ozt
  • Copper: -0.4% to $4.12/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0632
  • GBP/USD: UNCH at 1.2746
  • USD/CNH: -0.3% to 7.2198
  • USD/JPY: +0.2% to 154.93
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.5%; prior -10.8%)
  • 8:30 ET: October CPI (Briefing.com consensus 0.2%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%)
  • 10:30 ET: Weekly crude oil inventories (prior +2.15 mln)
  • 14:00 ET: October Treasury Budget (prior $64.0 bln)