Bond Market Update

Longer Tenors Inch Higher

• U.S. Treasuries are on track for a higher start in longer tenors while the short end is set for a slightly lower open after outperforming yesterday. Treasury futures climbed in early evening action, followed by a brief dip that was then followed by a return to overnight highs. Overnight volume was reduced by holiday closures in China and India while sovereign debt trades generally higher alongside U.S. Treasuries. The market was scheduled to receive the latest weekly Initial Claims (Briefing.com consensus 220,000; prior 218,000) and Continuing Claims (prior 1.926 mln) at 8:30 ET, followed by August Factory Orders (Briefing.com consensus 0.8%; prior -1.3%) at 10:00 ET, but all these reports are being delayed by the ongoing shutdown. Crude oil holds a modest loss while the U.S. Dollar Index is down 0.1% at 97.59.
• Yield Check:
  • 2-yr: +1 bp to 3.55%
  • 3-yr: UNCH at 3.56%
  • 5-yr: UNCH at 3.68%
  • 10-yr: -1 bp to 4.10%
  • 30-yr: -1 bp to 4.71%

• News:
  • Treasury Secretary Bessent told CNBC that he expects a "pretty big breakthrough" in talks with China that will take place later this month.
  • Shipper Maersk said that China's container shipments to Latin America, Africa, and Europe increased markedly while shipments to North America are down about 15% yr/yr.
  • Japan's Agriculture Minister Shinjiro Koizumi is reportedly a slight favorite to win Saturday's LDP leadership vote.
  • British food retailer Tesco increased its guidance while discount air carrier Ryanair reported strong metrics for September.
  • The British government may exempt new listings on the London Stock Exchange from paying stamp duty amid growing concerns about falling competitiveness of British markets.
  • There was some speculation that the Swiss National Bank could cut its policy rate into negative territory after cool September CPI.
  • Japan's September Monetary Base was down 6.1% yr/yr (expected -3.8%; last -4.1%). September Household Confidence rose to 35.3 from 34.9 (expected 35.1).
  • South Korea's September CPI was up 0.5% m/m (expected 0.4%; last -0.1%), rising 2.1% yr/yr (expected 2.0%; last 1.7%).
  • Hong Kong's August Retail Sales rose 3.8% yr/yr (last 1.8%).
  • Australia's August trade surplus reached AUD1.825 bln (expected surplus of AUD6.130 bln; last surplus of AUD6.612 bln).
  • Eurozone's August Unemployment Rate rose to 6.3% from 6.2% (expected 6.2%).
  • France's August government budget deficit reached EUR157.5 bln (last deficit of EUR142.0 bln).
  • Italy's August Unemployment Rate rose to 6.0% from 5.9%, as expected.
  • Spain's September unemployment decreased by 4,800 (expected +15,400; last +21,900)
  • Swiss September CPI was down 0.2% m/m, as expected (last -0.1%) and up 0.2% yr/yr (expected 0.3%; last 0.2%).
• Commodities:
  • WTI Crude: -0.5% to $61.45/bbl
  • Gold: +0.3% to $3909.10/ozt
  • Copper: +1.5% to $4.956/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1752
  • GBP/USD: UNCH at 1.3475
  • USD/CNH: +0.1% to 7.1308
  • USD/JPY: -0.1% to 146.82
• Data out Today:
  • 10:30 ET: Weekly natural gas inventories (prior +75 bcf)

Editor's Note: The original version of this comment said that the weekly Initial Claims report will be coming out at 8:30 ET, but that report is being delayed by the government shutdown.