Bond Market Update

Belly Ahead

• U.S. Treasuries are on track for a higher start with the long bond set to show some early underperformance. Treasury futures saw limited movement during the overnight session, briefly falling to lows as the focus shifted from Asia to Europe. Overall, Treasury futures have held up better than other sovereign debt, considering most yields are up this morning. British gilts have underperformed amid reports that Chancellor Reeves no longer plans to seek higher income taxes in the Autumn budget statement thanks to improved economic projections from the Office of Budget Responsibility. Reported earlier in the night, China's growth figures for October showed some softness in fixed asset investment and industrial production. The U.S. government has reopened, but economic data reporting has yet to resume. National Economic Council Director Hassett said that a partial release of the October jobs report is being planned and that the full September jobs report could be released next week. Crude oil is on the rise while the U.S. Dollar Index is flat at 99.12.
• Yield Check:
  • 2-yr: -3 bps to 3.56%
  • 3-yr: -4 bps to 3.55%
  • 5-yr: -4 bps to 3.66%
  • 10-yr: -3 bps to 4.08%
  • 30-yr: -2 bps to 4.68%

• News:
  • The Trump administration is planning some tariff exemptions aimed at easing food inflation, according to The New York Times.
  • Officials from South Korea and the U.S. officially signed the trade and investment deal.
  • Germany's budget committee approved 2026 spending of EUR524.5 bln and nearly EUR100 bln in borrowing.
  • Press reports from the U.K. suggest that Chancellor Reeves will not seek higher taxes in the Autumn budget statement after all.
  • China's October Fixed Asset Investment was down 1.7% yr/yr (expected -0.9%; last -0.5%), October Industrial Production rose 4.9% yr/yr (expected 5.5%; last 6.5%), October Retail Sales increased 2.9% yr/yr (expected 2.7%; last 3.0%), rising 3.3% yr/yr (last 3.5%). October Unemployment Rate dipped to 5.1% from 5.2% (expected 5.2%). October House Prices were down 2.2% yr/yr (last -2.2%).
  • South Korea's October Import Price Index was up 0.5% yr/yr (last 0.6%) and Export Price Index was up 4.8% yr/yr (last 2.2%).
  • India's October WPI Inflation was down 1.21% yr/yr (expected -0.60%; last 0.13%).
  • Hong Kong's Q3 GDP expanded 0.7% qtr/qtr, as expected (last 0.7%), growing 3.8% yr/yr, as expected (last 3.8%).
  • New Zealand's October Business PMI hit 51.4 (last 50.1).
  • Eurozone's Q3 GDP expanded 0.2% qtr/qtr, as expected (last 0.1%), growing 1.4% yr/yr (expected 1.3%; last 1.5%). Q3 Employment increased by 0.1% qtr/qtr, as expected (last 0.1%), growing 0.5% yr/yr (last 0.6%). September trade surplus reached EUR19.4 bln (last surplus of EUR1.9 bln).
  • France's October CPI was up 0.1% m/m, as expected (last -1.0%), rising 0.9% yr/yr (expected 1.0%; last 1.2%).
  • Italy's September trade surplus reached EUR2.852 bln (expected surplus of EUR3.180 bln; last surplus of EUR1.875 bln).
  • Spain's October CPI was up 0.7% m/m, as expected (last -0.3%), rising 3.1% yr/yr, as expected (last 3.0%). October Core CPI was up 2.5% yr/yr, as expected (last 2.4%).
• Commodities:
  • WTI Crude: +1.5% to $59.54/bbl
  • Gold: -1.8% to $4117.70/ozt
  • Copper: -0.9% to $5.056/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1648
  • GBP/USD: -0.1% to 1.3177
  • USD/CNH: UNCH at 7.0935
  • USD/JPY: -0.3% to 154.07
• Data out Today:
  • 8:30 ET: October PPI (DELAYED; Briefing.com consensus 0.4%; prior NA), Core PPI (DELAYED; Briefing.com consensus 0.3%; prior NA), October Retail Sales (DELAYED; Briefing.com consensus 0.3%; prior NA), and Retail Sales ex-auto (DELAYED; Briefing.com consensus 0.3%; prior NA)
  • 10:00 ET: September Business Inventories (DELAYED; Briefing.com consensus 0.1%; prior NA)
  • 10:30 ET: Weekly natural gas inventories (prior +33 bcf)