Bond Market Update

Selling Accelerates

• U.S. Treasuries have widened their opening losses with the 10-yr note and shorter tenors feeling the pressure while the long bond is putting more of a fight. The market climbed off its starting levels during the first 90 minutes of action, but slumped to fresh lows after the ISM Service PMI for October (56.0%; Briefing.com consensus 53.5%) showed a strong acceleration in activity, serving as a reassuring sign about the largest sector of the U.S. economy. The post-data selling has lifted yields on the 5-yr note and shorter tenors past their highs from Friday while the 10-yr yield is threatening to do the same leading into today's $42 bln 10-yr note sale. Equities are off to a strong start with the Nasdaq (+1.0%) keeping a slight lead over the S&P 500 (+0.9%) in early trade.
• Yield Check:
  • 2-yr: +5 bps to 4.23%
  • 3-yr: +5 bps to 4.20%
  • 5-yr: +6 bps to 4.23%
  • 10-yr: +6 bps to 4.36%
  • 30-yr: +2 bps to 4.52%