Bond Market Update

Sitting Tight

• U.S. Treasuries stuck to narrow trading ranges overnight, balanced by reports that China has tightened its export controls for rare earth materials used in high-tech products and military applications, an agreement between Israel and Hamas on phase one of a peace plan, and New York Fed President Williams (FOMC voter) indicating he is in favor of more rate cuts due to labor market concerns. There is a $22 billion 30-yr bond reopening today, with results at 1:00 p.m. ET. There won't be any economic data of note today due to the government shutdown.
• Yield Check:
  • 2-yr: +1 bp to 3.59%
  • 3-yr: UNCH at 3.60%
  • 5-yr: UNCH at 3.72%
  • 10-yr: -1 bp to 4.12%
  • 30-yr: -1 bp to 4.71%

• News:
  • U.S. government shutdown enters day nine. Some Republicans are against the White House conducting mass firings during shutdown. WSJ
  • China's Ministry of Commerce announced tightening of export restrictions on rare earth materials for high-tech products and military applications
  • President Macron is expected to name a new prime minister before the weekend.
  • The Supreme Court will hear a case next week challenging a key section of the Voting Rights Act. If it is overturned, it could allow Republicans to draw up to 19 new House seats in their favor, all but guaranteeing them control of the lower chamber. Politico
  • President Trump expected to exclude generic drugs from pharmaceutical tariffs. WSJ
  • Bank of England policymaker Mann making a case for policy to remain restrictive due to inflation concerns.
  • Delta Air Lines CEO Ed Bastian, in CNBC interview, says demand for travel started to rebound in June and July and that he is not seeing any impact "at all" from the government shutdown
  • USD/JPY topped 153.00 overnight, spurring more speculation about the possibility of MOF intervention soon.
  • The Philippines central bank unexpectedly cut its base interest rate by 25 bps to 4.75% versus an expectation for no change
  • Germany's August trade balance was EUR17.2 bln (expected EUR15.1 bln; prior EUR14.7 bln), with exports -0.5% m/m (expected 0.3%; prior -0.6%) and imports -1.3% m/m (expected -0.5%; prior -0.1%)
• Commodities:
  • WTI crude: -0.6% to $62.16/bbl
  • Gold: -0.3% to $4058.40/ozt
  • Copper: +1.9% to $5.19/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1617
  • GBP/USD: -0.2% to 1.3375
  • USD/CNH: +0.1% to 7.1496
  • USD/JPY: +0.1% to 152.75
• The Day Ahead:
  • 08:30 ET: Weekly Initial Claims (Briefing.com consensus 233,000; prior NA) and Continuing Claims (prior NA) delayed due to government shutdown
  • 10:00 ET: August Wholesale Inventories (Briefing.com consensus -0.2%; prior 0.1%) delayed due to government shutdown
  • 10:30 ET: Weekly natural gas inventories (prior +53 bcf)
• Treasury Auctions:
  • 13:00 ET: $22 bln 30-yr Treasury bond reopening results