Bond Market Update

Safety Trade

• U.S. Treasuries have been bid in overnight trading, as global equity markets have fallen into a risk-off rut, driven by valuation and growth concerns. There isn't a lot of news of note to drive things. The weakness in global equity markets is the news of note. Market participants continue to wait on key events this week (FOMC Minutes, NVIDIA results, and September jobs report) after digesting some disappointing earnings results and guidance from Home Depot, which have stirred worries about a slowdown in discretionary spending, and a surprise release of the initial jobless claims data for the week ending October 18. Claims (232K) were up versus the prior report but were not high in an absolute sense.
• Yield Check:
  • 2-yr: -4 bps to 3.57%
  • 3-yr: -4 bps to 3.57%
  • 5-yr: -4 bps to 3.68%
  • 10-yr: -3 bps to 4.10%
  • 30-yr: -3 bps to 4.71%

• News:
  • The lawyer for Fed Governor Lisa Cook provided a defense of her mortgage applications. WSJ
  • Senator Bill Cassidy (R-LA) proposed a new healthcare plan that has President Trump's support. His plan redirects Affordable Care Act subsidies from health insurance companies to consumers. It is unclear if the plan has enough support to pass. Politico
  • Home Depot misses by $0.10, reports revs in-line; guides FY26 EPS below consensus, revs below consensus
  • The UK's Prudential Regulation Authority is raising the cap on bank deposit insurance from GPB85K to GBP120K starting in December
  • Japan's finance minister expressed "deep concern" about FX moves
  • Japanese government bonds are falling ahead of Japanese Prime Minister Sanae Takaichi's fiscal package. Bloomberg
  • JGB yields continued to rise, with the 20-yr note yield (2.81%) hitting its highest level since 1999
• Commodities:
  • WTI crude: -0.1% to $59.86/bbl
  • Gold: -1.0% to $4032.70/ozt
  • Copper: -0.7% to $4.98/lb
• Currencies:
  • EUR/USD: flat at 1.1590
  • GBP/USD: -0.1% to 1.3149
  • USD/CNH: +0.1% to 7.1123
  • USD/JPY: flat at 155.23
• The Day Ahead:
  • 09:15 ET: October Industrial Production and Capacity Utilization
  • 10:00 ET: November NAHB Housing Market Index
  • 10:30 ET: Fed Governor Barr on Bank Supervision (FOMC voter)
  • 16:00 ET: September Net Long-Term TIC Flows