Bond Market Update

Post-FOMC Selling Extended

• U.S. Treasuries retreated on Thursday, adding to their post-FOMC losses with longer tenors leading the weakness. The trading day started with losses across the curve after the night featured the highly anticipated meeting between President Trump and China's President Xi. The meeting was positive enough that President Trump agreed to reduce the fentanyl-related tariff to 10% and said that there is no roadblock when it comes to rare earths, adding that he will visit China in April. Treasuries added to their opening losses in early trade, but they found support as equities struggled out of the gate. The market climbed off lows in mid-morning action, but Treasuries never made it back to their unchanged levels, finishing the day above their opening marks, but below yesterday's closing levels. The market was scheduled to receive the advance Q3 GDP report today, but that release was delayed by the ongoing shutdown, which will also delay the release of the Q3 Employment Cost Index and the Personal Income/Outlays report for September. Both reports were scheduled to come out tomorrow morning. Crude oil recorded a slim gain while the U.S. Dollar Index rose 0.3% to 99.52.
• Yield Check:
  • 2-yr: +3 bps to 3.61%
  • 3-yr: +2 bps to 3.61%
  • 5-yr: +2 bps to 3.72%
  • 10-yr: +4 bps to 4.09%
  • 30-yr: +5 bps to 4.65%

• News:
  • Japan's Prime Minister Takaichi will meet with China's President Xi tomorrow.
  • The Hong Kong Monetary Authority followed the Fed's rate cut with a 25-basis point reduction of its own, lowering its policy rate to 4.25%.
  • The Bank of Japan left its rate at 0.50%, as expected.
  • Singapore's Q3 Unemployment Rate remained at 2.0% (last 2.0%).
  • Australia's Q3 Import Price Index was down 0.4% qtr/qtr (expected -0.3%; last -0.8%), falling 0.9% qtr/qtr (last -4.5%).
  • New Zealand's October ANZ Business Confidence rose to 58.1 from 49.6.
  • Eurozone's Q3 GDP expanded 0.2% qtr/qtr (expected 0.1%; last 0.1%), growing 1.3% yr/yr (expected 1.2%; last 1.5%). October Business and Consumer Survey rose to 96.8 from 95.6 (expected 95.7).
  • Germany's Q3 GDP was unchanged qtr/qtr, as expected (last -0.3%), rising 0.3% yr/yr, as expected (last 0.2%). September Unemployment decreased by 1,000 (expected 8,000; last 13,000).
  • France's Q3 GDP expanded 0.5% qtr/qtr (expected 0.2%; last 0.3%), growing 0.9% yr/yr (expected 0.6%; last 0.7%). September Consumer Spending was up 0.3% m/m (expected 0.0%; last 0.2%). October Unemployment Rate remained at 6.3%, as expected (last 6.3%).
  • Italy's Q3 GDP was unchanged qtr/qtr (expected 0.1%; last -0.1%), rising 0.4% yr/yr (expected 0.6%; last 0.4%). September Unemployment Rate rose to 6.1% from 6.0% (expected 6.0%). August Industrial Sales were down 0.7% m/m (last 0.4%), falling 0.1% yr/yr (last 1.2%).
  • Spain's October CPI was up 0.7% m/m (last -0.3%), rising 3.1% yr/yr (expected 2.9%; last 3.0%). October Core CPI was up 2.5% yr/yr (last 2.4%).
  • Swiss October KOF Leading Indicators rose to 101.3 from 98.0 (expected 98.4).
• Today's Data:
  • Weekly natural gas inventories increased by 74 bcf after increasing by 87 bcf a week ago.
• Commodities:
  • WTI crude: +0.2% to $60.56/bbl
  • Gold: +0.4% to $4015.70/ozt
  • Copper: -3.0% to $5.10/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1567
  • GBP/USD: -0.4% to 1.3146
  • USD/CNH: +0.2% to 7.1116
  • USD/JPY: +1.0% to 154.08
• The Day Ahead:
  • 8:30 ET (DELAYED): Q3 Employment Cost Index (Briefing.com consensus 0.9%; prior 0.9%), September Personal Income (Briefing.com consensus 0.4%; prior 0.4%), Personal Spending (Briefing.com consensus 0.4%; prior 0.6%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.3%; prior 0.2%)
  • 9:45 ET: October Chicago PMI (Briefing.com consensus 42.0; prior 40.6)