Bond Market Update

Inching Lower

• U.S. Treasuries are on track for a slightly lower start after spending the night in a narrow range. Treasury futures dipped in early evening action before spending the rest of the Asian session in a slow return to their starting levels. The market found some light resistance once the focus shifted to Europe, as futures inched back toward their overnight lows. It was a subdued night in global bond and equity markets with major Asian bourses seeing gains or losses of no more than 0.5%, which has also been the case in Europe. China's trade surplus for August exceeded expectations, but import growth was almost non-existent, reflecting weak domestic demand. The U.S. session will not see any top-tier data today, but the August CPI report (Briefing.com consensus 0.2%; prior 0.2%) will be released tomorrow morning. The U.S. Treasury will sell $58 bln in 3-yr notes at 13:00 ET. Crude oil is giving back yesterday's gain while the U.S. Dollar Index is up 0.1% at 101.65.
• Yield Check:
  • 2-yr: +1 bp to 3.68%
  • 3-yr: +2 bps to 3.55%
  • 5-yr: +2 bps to 3.51%
  • 10-yr: +2 bps to 3.72%
  • 30-yr: +2 bps to 4.02%

• News:
  • Former President Trump and Vice President Harris will take part in a debate this evening.
  • Australia's government is expected to strike down the proposal put forth by Treasurer Chalmers to overhaul the board of the Reserve Bank of Australia.
  • France's Finance Minister Le Maire said that the deficit target (5.1% of GDP) must be met this year.
  • British Prime Minister Starmer is setting the stage for "unpopular" decisions in the autumn budget.
  • Former European Central Bank President Draghi published a report calling on the EU to engage in radical reforms that would cost around EUR800 bln per year.
  • China's August trade surplus reached $91.02 bln (expected surplus of $81.40 bln; last surplus of $84.65 bln) as imports rose 0.5% yr/yr (expected 2.0%; last 7.2%) and exports grew 8.7% yr/yr (expected 6.5%; last 7.0%).
  • Japan's August Machine Tool Orders were down 3.5% yr/yr (last 8.4%).
  • Australia's September Westpac Consumer Sentiment was down 0.5% (last 2.8%). July Building Approvals rose 10.4% m/m, as expected (last -6.4%) and Private House Approvals rose 0.6% m/m, as expected (last -0.5%). August NAB Business Confidence fell to -4 from 1 and Business Survey fell to 3 from 6.
  • New Zealand's Q2 Manufacturing Sales Volume was up 0.6% qtr/qtr (last -0.3%).
  • Germany's August CPI was down 0.1% m/m, as expected (last 0.3%) but up 1.9% yr/yr, as expected (last 2.3%).
  • U.K.'s July Average Earnings Index + Bonus was up 4.0% yr/yr (expected 4.1%; last 4.6%). July three-month employment increased by 265,000 (expected 115,000; last 97,000) and July Unemployment Rate slipped to 4.1% from 4.2%, as expected. August Claimant Count reached 23,700 (expected 95,500; last 102,300).
  • Italy's July Industrial Production was down 0.9% m/m (expected -0.2%; last 0.5%), falling 3.3% yr/yr (last -2.6%).
  • Spain's July Industrial Production was down 0.4% yr/yr (last 0.2%).
• Commodities:
  • WTI Crude: -1.4% to $67.76/bbl
  • Gold: +0.1% to $2534.40/ozt
  • Copper: -0.4% to $4.128/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1030
  • GBP/USD: +0.1% to 1.3089
  • USD/CNH: +0.2% to 7.1296
  • USD/JPY: UNCH at 143.18
• Data out Today:
  • 6:00 ET: August NFIB Small Business Optimism (actual 91.2; prior 93.7)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results