Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a modestly higher start after a quiet night in the futures market. Treasury futures spent the first half of the overnight session in a slow retreat that was reversed shortly after the focus turned to action in Europe, followed by a push to highs in recent trade. Markets in China remained closed for Golden Week while South Korea's Kospi was also closed for a holiday. Japan reported a rise in its unemployment rate for August (to 2.6% from 2.3%) while the data slate from Europe featured final September Services PMI readings that were mostly below expectations. The U.S. session will not see the release of the Employment Situation report for September but a couple private sector reports pertaining to the services sector will be released later this morning. Final September S&P Global U.S. Services PMI (prior 53.9) will be released at 9:45 ET, followed by September ISM Services (Briefing.com consensus 51.7%; prior 52.0%) at 10:00 ET. Crude oil is bouncing off its lowest level since late May while the U.S. Dollar Index is down 0.1% at 97.73.
• Yield Check:
  • 2-yr: -1 bp to 3.54%
  • 3-yr: -1 bp to 3.55%
  • 5-yr: UNCH at 3.67%
  • 10-yr: -1 bp to 4.08%
  • 30-yr: -2 bps to 4.68%

• News:
  • OPEC+ will meet this Sunday and the market expects that an output increase will be announced.
  • Bank of Japan Governor Ueda said that the central bank must maintain accommodative policy, which was seen as a slight pushback to rising rate hike expectations. 
  • Japan's LDP leadership vote will take place tomorrow with Agriculture Minister Shinjiro Koizumi still seen as a slight favorite.
  • U.K.'s Office of Budget Responsibility will publish some forecasts today that will help shape the autumn budget statement on November 26.
  • Italy lowered its growth forecast for 2025 to 0.5% from 0.6% while the outlook for 2026 was reduced to 0.7% from 0.8%. The 2025 budget deficit target was lowered to 3.0% from 3.3% due to strong tax revenues.
  • France's socialist party is seeking to prevent pension reform or push through a tax on individuals with high net worth.
  • Japan's August Unemployment Rate rose to 2.6% from 2.3% (expected 2.4%) and jobs/applications ratio fell to 1.20 from 1.22 (expected 1.22). September Services PMI hit 53.3 (expected 53.0; last 53.1).
  • Singapore's August Retail Sales were up 0.5% m/m (last 3.9%), rising 5.2% yr/yr (last 4.6%).
  • Australia's September Services PMI hit 52.4 (expected 52.0; last 55.8).
  • Eurozone's September Services PMI hit 51.3 (expected 51.4; last 50.5). August PPI was down 0.3% m/m (expected -0.1%; last 0.3%), falling 0.6% yr/yr (expected -0.4%; last 0.2%).
  • Germany's September Services PMI hit 51.5 (expected 52.5; last 49.3).
  • U.K.'s September Services PMI hit 50.8 (expected 51.9; last 54.2).
  • France's August Industrial Production was down 0.7% m/m (expected 0.3%; last -0.1%). September Services PMI hit 48.5 (expected 48.9; last 49.8).
  • Italy's September Services PMI hit 52.5 (expected 51.5; last 51.5). August Retail Sales were down 0.1% m/m (expected 0.0%; last 0.0%) but up 0.5% yr/yr (last 1.8%). Q2 Public Deficit hit 2.0% (last 8.1%).
  • Spain's September Services PMI hit 54.3 (expected 53.3; last 53.2).
• Commodities:
  • WTI Crude: +0.3% to $60.68/bbl
  • Gold: +0.4% to $3883.10/ozt
  • Copper: +1.1% to $5.00/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1736
  • GBP/USD: +0.1% to 1.3448
  • USD/CNH: +0.1% to 7.1353
  • USD/JPY: +0.1% to 147.27
• Data out Today:
  • 9:45 ET: Final September S&P Global U.S. Services PMI (prior 53.9)
  • 10:00 ET: September ISM Services (Briefing.com consensus 51.7%; prior 52.0%)