Bond Market Update

Quiet Start Ahead

• Shorter-dated Treasuries are on track for a slightly lower start while longer tenors are expected to display some early relative strength after underperforming over the past two days. Treasury futures climbed in early evening action, but the bulk of the gains faded as the night went on with the market reversing from highs shortly after attention turned to the European session. Earlier in the night, the Bank of Japan made no changes to its overall policy stance while the People's Bank of China made no changes to its one-year and five-year loan prime rates. Both outcomes were expected. Economic data released overnight included in-line inflation figures from Japan and above-consensus British Retail Sales. The U.S. session, however, will be free of data. Crude oil is slipping from its best level in nearly three weeks while the U.S. Dollar Index is up 0.2% at 100.83.
• Yield Check:
  • 2-yr: +1 bp to 3.61%
  • 3-yr: +1 bp to 3.50%
  • 5-yr: +1 bp to 3.51%
  • 10-yr: -1 bp to 3.73%
  • 30-yr: -1 bp to 4.06%

• News:
  • The Chinese government will reportedly reduce restrictions on property purchases.
  • British Chancellor Reeves is being pressured to limit spending cuts and tax increases in the Autumn budget.
  • European Central Bank policymakers Rehn and De Guindos said that incoming data will determine the pace of easing.
  • Mercedes lowered its guidance for the year due to weak demand in China.
  • Japan's August National CPI was up 0.5% m/m (last 0.2%), rising 3.0% yr/yr (last 2.8%). August National Core CPI was up 2.8% yr/yr, as expected (last 2.7%).
  • China's August FDI was down 31.5% YTD (last -29.6%).
  • Hong Kong's August CPI was unchanged m/m (last 1.0%), rising 2.5% yr/yr (expected 2.6%; last 2.5%).
  • New Zealand's August Credit Card Spending was down 3.1% yr/yr (last -3.7%).
  • Germany's August PPI was up 0.2% m/m (expected 0.0%; last 0.2%) but down 0.8% yr/yr (expected -1.0%; last -0.8%).
  • U.K.'s August Retail Sales rose 1.0% m/m (expected 0.3%; last 0.7%), increasing 2.5% yr/yr (expected 1.4%; last 1.5%). August Core Retail Sales rose 1.1% m/m (expected 0.5%; last 1.0%), increasing 2.3% yr/yr (expected 1.1%; last 1.4%). August Public Sector Net Borrowing reached GBP13.73 bln (expected GBP12.10 bln; last GBP3.10 bln).
  • France's September Business Survey remained at 99, as expected.
  • Spain's July trade deficit reached EUR3.20 bln (last deficit of EUR710 mln).
• Commodities:
  • WTI Crude: -0.3% to $71.75/bbl
  • Gold: +0.9% to $2693.20/ozt
  • Copper: +0.2% to $4.354/lb
• Currencies:
  • EUR/USD: UNCH at 1.1164
  • GBP/USD: +0.2% to 1.3304
  • USD/CNH: -0.2% to 7.0527
  • USD/JPY: +1.1% to 144.16
• No Data on Today's Schedule