Bond Market Update

Steady Start Ahead of October PPI

• U.S. Treasuries are on track for a mostly flat start while the long end is expected to show some relative strength ahead of the 8:30 ET release of weekly Initial Claims (Briefing.com consensus 220,000; prior 221,000) and October PPI (Briefing.com consensus 0.2%; prior 0.0%)/Core PPI (Briefing.com consensus 0.3%; prior 0.2%) to follow yesterday's in-line CPI report. Treasury futures faced some pressure at the start of the night, but they recovered steadily, reaching highs during the past hour. Overnight action was underscored by ongoing concerns about an expected tough approach to trade from the incoming Trump administration. To that end, China is reportedly preparing strong countermeasures for a potential trade war with the U.S. Crude oil is trying to pull away from its lowest level of the month while the U.S. Dollar Index is up 0.2% at 106.73.
• Yield Check:
  • 2-yr: UNCH at 4.28%
  • 3-yr: UNCH at 4.26%
  • 5-yr: UNCH at 4.30%
  • 10-yr: UNCH at 4.45%
  • 30-yr: -2 bps to 4.62%

• News:
  • Fed Chairman Powell is scheduled to take part in a panel discussion at the Dallas Regional Chamber of Commerce at 15:00 ET.
  • China's rumored tax cuts for homebuyers were officially announced today and will become effective at the start of December.
  • Japan is planning an extraordinary Diet session for the end of November to pass a budget.
  • British Chancellor Reeves is expected to announce pension reform plans tonight.
  • French prosecutors are setting their sights on Marine Le Pen over alleged embezzlement and misappropriation of EU funds.
  • India's October WPI Inflation was up 2.36% yr/yr (expected 2.20%; last 1.84%). October trade deficit reached $27.1 bln (last deficit of $20.8 bln).
  • South Korea's September M2 Money Supply increased 5.6% yr/yr (last 5.3%).
  • Australia's October Employment increased by 15,900 (expected 25,200; last 61,300) and full employment increased by 9,700 (last 48,800). October Unemployment Rate remained at 4.1%, as expected, and Participation Rate ticked down to 67.1% from 67.2% (expected 67.2%). November MI Inflation Expectations decelerated to 3.8% from 4.0%.
  • New Zealand's October FPI was down 0.9% m/m (last 0.5%).
  • Eurozone's flash Q3 GDP expanded 0.4% qtr/qtr, as expected (last 0.4%), growing 0.9% yr/yr, as expected (last 0.9%). Q3 Employment increased by 0.2% qtr/qtr, as expected (last 0.2%), rising 1.0% yr/yr (last 0.8%). September Industrial Production was down 2.0% m/m (expected -1.3%; last 1.5%), falling 2.8% yr/yr (expected -2.0%; last -0.1%).
  • Spain's October CPI was up 0.6% m/m, as expected (last -0.6%), rising 1.8% yr/yr, as expected (last 1.5%). October Core CPI was up 2.5% yr/yr (expected 2.5%; last 2.4%).
• Commodities:
  • WTI Crude: +0.6% to $68.81/bbl
  • Gold: -1.2% to $2556.20/ozt 
  • Copper: -1.2% to $4.034/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0535
  • GBP/USD: -0.3% to 1.2665
  • USD/CNH: +0.1% to 7.2511
  • USD/JPY: +0.4% to 156.00
• Data out Today:
  • 8:30 ET: October PPI (Briefing.com consensus 0.2%; prior 0.0%) and Core PPI (Briefing.com consensus 0.3%; prior 0.2%), Weekly Initial Claims (Briefing.com consensus 220,000; prior 221,000), and Continuing Claims (prior 1.892 mln)
  • 10:30 ET: weekly natural gas inventories (prior +69 bcf)
  • 11:00 ET: Weekly crude oil inventories (prior +2.15 mln)