Bond Market Update

Longer Tenors Pad Monday Gains

• U.S. Treasuries edged higher on Tuesday, pressuring the 10-yr yield past its low from last week to a level not seen since early April. Like yesterday, today's session was fairly quiet with no noteworthy domestic or international data to influence sentiment. The Secured Overnight Financing Rate dipped again, which was a welcome sight, Longer tenors outperformed from the start, building on their opening gains during the first 90 minutes of trade. The advance met some intraday resistance, but longer tenors were the most resilient, staying near their highs into the close while shorter tenors held onto a smaller portion of their gains. Tomorrow's session will feature a $13 bln 20-yr bond reopening. Crude oil remained above $57/bbl, but there was significant movement in other commodities as gold and silver plunged to levels from a week ago. The U.S. Dollar Index rose 0.4% to 98.93.
• Yield Check:
  • 2-yr: UNCH at 3.46%
  • 3-yr: -1 bp to 3.46%
  • 5-yr: -2 bps to 3.56%
  • 10-yr: -2 bps to 3.96%
  • 30-yr: -3 bps to 4.55%

• News:
  • The U.S. and Canada are reportedly nearing a deal on aluminum, steel, and energy.
  • South Korea's exports through the first 20 days of October were down 8% yr/yr, though chip exports were up 20%.
  • British Chancellor Reeves repeated her pledge to meet fiscal rules while lowering the debt and deficit.
  • New Zealand's September trade deficit reached NZD1.355 bln (last deficit of NZD1.235 bln). September Credit Card Spending was up 0.2% yr/yr (last 3.3%).
  • U.K.'s September Public Sector Net Borrowing reached GBP20.20 bln (expected GBP20.70 bln; last GBP18.00 bln).
  • Swiss September trade surplus reached CHF4.073 bln (expected surplus of CHF5.22 bln; last surplus of CHF3.876 bln).
• Commodities:
  • WTI crude: +0.4% to $57.24/bbl
  • Gold: -5.7% to $4110.60/ozt
  • Copper: -1.2% to $4.97/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1607
  • GBP/USD: -0.3% to 1.3373 
  • USD/CNH: +0.1% to 7.1253
  • USD/JPY: +0.8% to 151.91
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior -1.8%)
  • 10:30 ET: Weekly crude oil inventories (prior +3.52 mln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results