Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a modestly higher start after a quiet night that lacked the participation of markets in Japan, China, and South Korea with the latter two set to remain closed tomorrow. Treasury futures climbed at the start of the overnight session, inching past their early highs once the focus turned to action in Europe. The market backed down from highs over the past couple hours before finding some support near Friday's closing levels. China's growth figures for August underwhelmed again while the European session has seen some positive commentary from ratings agencies with respect to Germany and Greece. In the U.S., there is renewed speculation that Wednesday's rate cut will be bigger than 25 basis points after former FOMC Vice Chair Dudley penned an op-ed for Bloomberg, saying that he expects the Fed to announce a 50-bps cut. Crude oil trades higher while the U.S. Dollar Index is down 0.4% at 100.70.
• Yield Check:
  • 2-yr: -3 bps to 3.55%
  • 3-yr: -2 bps to 3.41%
  • 5-yr: -1 bp to 3.41%
  • 10-yr: -2 bps to 3.63%
  • 30-yr: -2 bps to 3.96%

• News:
  • There was another attempt on former President Trump's life over the weekend.
  • New Zealand is expected to see no GDP growth in fiscal 24/25, according to NZIER.
  • Fitch affirmed Germany's AAA rating with a Stable outlook.
  • Moody's affirmed Greece's Ba1 rating and raised the outlook to Positive from Stable.
  • European Central Bank policymaker Wunsch spoke in favor of additional rate cuts while policymaker De Guindos repeated that the future rate path has not been determined.
  • Norway had its first failed auction in more than 15 years when it failed to find sufficient bids for its 12-month bill sale.
  • China's August Industrial Production was up 4.5% yr/yr (expected 4.7%; last 5.1%), August Retail Sales were up 2.1% yr/yr (expected 2.5%; last 2.7%), August Fixed Asset Investment was up 3.4% yr/yr (expected 3.5%; last 3.6%), August House Prices were down 5.3% yr/yr (last -4.9%), August Unemployment Rate rose to 5.3% from 5.2% (expected 5.2%), and August FDI was down 31.5% YTD (last -29.6%).
  • Eurozone's July trade surplus reached EUR21.2 bln (expected EUR14.9 bln; last EUR21.7 bln). Q2 Wages rose 4.5% yr/yr (last 5.2%) and Q2 Labor Cost Index was up 4.7% yr/yr (last 5.0%).
  • Germany's August WPI was down 0.8% m/m (last 0.3%), falling 1.1% yr/yr (last -0.1%).
  • Italy's August CPI was up 0.2% m/m, as expected (last 0.2%), rising 1.1% yr/yr, as expected (last 1.1%). July trade surplus reached EUR6.74 bln (expected surplus of EUR4.45 bln; last surplus of EUR5.15 bln).
  • Swiss August PPI was up 0.2% m/m (expected 0.1%; last 0.0%) but down 1.2% yr/yr (last -1.7%).
• Commodities:
  • WTI Crude: +1.0% to $69.33/bbl
  • Gold: -0.1% to $2608.80/ozt
  • Copper: +0.4% to $4.253/lb
• Currencies:
  • EUR/USD: +0.5% to 1.1124
  • GBP/USD: +0.6% to 1.3200
  • USD/CNH: -0.1% to 7.0926
  • USD/JPY: -0.6% to 139.89
• Data out Today:
  • 8:30 ET: September Empire State Manufacturing survey (Briefing.com consensus -4.1; prior -4.7)