Bond Market Update

Another Bounce Attempt Underway

• U.S. Treasuries are on track for a higher start with longer tenors expected to pace a rebound from Friday's retreat. The market is on track to reverse Friday's slide after a subdued night in global markets. Japan was closed for a holiday while reports from China point to a likely escalation in the trade battle with the EU. Economic data released overnight showed an uptick in the eurozone's final Manufacturing PMI for October (to 46.0 from 45.0), though activity is still contracting. The U.S. session will see the release of just one data point—September Factory Orders (Briefing.com consensus -0.4%; prior -0.2%)—at 10:00 ET and the U.S. Treasury will sell $58 bln in 3-yr notes at 13:00 ET. Crude oil is rising amid Iranian threats toward Israel while the U.S. Dollar Index is down 0.6% at 103.68, falling back below its 200-day moving average (103.83).
• Yield Check:
  • 2-yr: -4 bps to 4.16%
  • 3-yr: -6 bps to 4.12%
  • 5-yr: -7 bps to 4.14%
  • 10-yr: -7 bps to 4.29%
  • 30-yr: -8 bps to 4.48%

• News:
  • The leader of Japan's opposition party called on the Bank of Japan to refrain from raising rates for at least six months.
  • China is taking steps toward implementing tariffs on some food and alcohol products from the EU in response to the imposition of new duties on electric vehicle imports from China. China will also subsidize domestic electric vehicle purchases through the end of the year.
  • South Korea's government appears to be on track to agree to remove the financial investment income tax.
  • The Bank of England is expected to announce a 25-bps rate cut on Thursday.
  • Discount air carrier Ryanair lowered its passenger traffic guidance for FY26, but also noted that the decline in pricing is moderating.
  • Australia's October MI Inflation Gauge was up 0.3% (last 0.1%) and October ANZ Job Advertisements rose 0.3% m/m (last 2.3%).
  • India's October Manufacturing PMI hit 57.5 (expected 57.4; last 56.5).
  • Eurozone's October Manufacturing PMI hit 46.0 (expected 45.9; last 45.0) and November Sentix Investor Confidence ticked up to -12.8 from -13.8 (expected -12.7).
  • Germany's October Manufacturing PMI hit 43.0 (expected 42.6; last 40.6).
  • France's October Manufacturing PMI hit 44.5, as expected (last 44.6).
  • Italy's October Manufacturing PMI hit 46.9 (expected 48.8; last 48.3).
  • Spain's October Manufacturing PMI hit 54.5 (expected 53.1; last 53.0).
• Commodities:
  • WTI Crude: +2.8% to $71.45/bbl
  • Gold: +0.1% to $2751.40/ozt
  • Copper: +0.8% to $4.407/lb
• Currencies:
  • EUR/USD: +0.6% to 1.0904
  • GBP/USD: +0.3% to 1.2963
  • USD/CNH: -0.5% to 7.0991
  • USD/JPY: -0.8% to 151.81
• Data out Today:
  • 10:00 ET: September Factory Orders (Briefing.com consensus -0.4%; prior -0.2%)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results