Bond Market Update

Attempting Pullback

• U.S. Treasuries are on track for a modestly lower start after yesterday's rally across the curve. Concerns about the health of regional banks remained at the forefront overnight after FT highlighted that banks have drawn more than $15 bln from the Fed's standing repurchase facility, representing the highest total since the early days of the pandemic. Treasury futures climbed steadily through the night, reaching their best levels during the early portion of the European session, followed by some backtracking. Global equity markets have had a generally weak showing today with worries about U.S. banks resulting in some skittishness. Crude oil is now within $2/bbl of its low from April while the U.S. Dollar Index is flat at 98.34.
• Yield Check:
  • 2-yr: UNCH at 3.43%
  • 3-yr: +1 bp to 3.44%
  • 5-yr: +1 bp to 3.56%
  • 10-yr: +1 bp to 3.99%
  • 30-yr: +2 bps to 4.60%

• News:
  • Japan's largest political parties agreed to hold a vote for prime minister on October 21.
  • China's Ministry of Commerce said that all license applications for civilian uses of rare earth elements will be approved and that there is no export ban in place.
  • European Central Bank policymaker Scicluna said that there is no rush to make another rate cut. 
  • South Korea's September Import Price Index was up 0.6% yr/yr (last -2.2%) and Export Price Index was up 2.2% yr/yr (last -1.1%). September Unemployment Rate fell to 2.5% from 2.6%. 
  • Singapore's September trade surplus reached SGD5.948 bln (last surplus of SGD4.99 bln).
  • Eurozone's September CPI was up 0.1% m/m, as expected (last 0.3%), rising 2.2% yr/yr, as expected (last 2.0%). September Core CPI was up 0.1% m/m, as expected (last 0.3%), rising 2.4% yr/yr (expected 2.3%; last 2.3%).
• Commodities:
  • WTI Crude: -0.1% to $57.43/bbl
  • Gold: +0.4% to $4322.10/ozt 
  • Copper: -0.4% to $4.979/lb
• Currencies:
  • EUR/USD: UNCH at 1.1684
  • GBP/USD: UNCH at 1.3434
  • USD/CNH: UNCH at 7.1243
  • USD/JPY: -0.1% to 150.23
• Data out Today: 
  • 8:30 ET: September Housing Starts (DELAYED; Briefing.com consensus 1.320 mln; prior 1.307 mln), Building Permits (DELAYED; Briefing.com consensus 1.312 mln; prior 1.312 mln), and September Import/Export Prices (DELAYED)
  • 9:15 ET: September Industrial Production (Briefing.com consensus 0.1%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 77.3%; prior 77.4%)
  • 16:00 ET: August net Long-Term TIC flows (prior $49.2 bln)