Bond Market Update

Midweek Dip Reversed

• U.S. Treasuries climbed on Thursday, recovering their slim midweek losses. The Treasury complex was on track for an early extension of yesterday's selling after a night that featured an upbeat showing from global equity markets after chip giant NVIDIA (NVDA) reported strong results for Q3 and raised its guidance for the year. The risk-on disposition carried into the U.S. session, but the early optimism morphed into profit taking in equities, helping keep Treasuries near their best levels of the day. The Treasury market reversed its lower start in immediate reaction to the Employment Situation report for September, which showed above-consensus Nonfarm Payrolls growth (119,000; Briefing.com consensus 50,000), though the August reading was revised down to reflect a contraction of 4,000 from +22,000. There was also an uptick in the Unemployment Rate to 4.4% from 4.3%, so the overall report was not as strong as the headline reading suggested. This will be the final jobs report ahead of the December FOMC meeting since the Bureau of Labor Statistics will not release the November report until December 16. Treasuries reached their best levels around noon, staying just below their highs into the close with yields on 5s and shorter tenors settling below their 50-day moving averages. Crude oil fell toward yesterday's low after giving back an early gain while the U.S. Dollar Index slipped 0.1% to 100.16.
• Yield Check:
  • 2-yr: -4 bps to 3.56%
  • 3-yr: -4 bps to 3.55%
  • 5-yr: -4 bps to 3.67%
  • 10-yr: -3 bps to 4.11%
  • 30-yr: -2 bps to 4.73%

• News:
  • Cleveland Fed President (2026 FOMC voter) Hammack said that Fed policy should remain somewhat restrictive.
  • The People's Bank of China left its one-year and five-year loan prime rates at their respective 3.00% and 3.50%, as expected.
  • China's rare earth magnet exports to the U.S. in October were up 56% month-over-month.
  • China banned imports of beef from Japan.
  • European Central Bank policymaker Makhlouf said that he is comfortable with the central bank's current policy stance, echoing recent comments from other governing council members.
  • Belgium's budget minister Vincent Van Peteghem is reportedly a frontrunner to become the new Eurogroup chief after the recent resignation of Pascal Donohoe.
  • Hong Kong's October CPI was up 0.3% m/m (last 0.1%), rising 1.2% yr/yr (last 1.1%).
  • Germany's October PPI was up 0.1% m/m (expected 0.0%; last -0.1%) but was down 1.8% yr/yr (expected -1.9%; last -1.7%).
  • U.K.'s November CBI Industrial Trends Orders rose to -37 from -38 (expected -33).
  • Swiss October trade surplus reached CHF4.319 bln (expected surplus of CHF4.76 bln; last surplus of CHF3.99 bln).
• Today's Data:
  • September nonfarm payrolls increased by 119,000 (Briefing.com consensus: 50,000). The 3-month average for total nonfarm payrolls increased to 62,000 from 18,000. August nonfarm payrolls revised to -4,000 from 22,000. July nonfarm payrolls revised to 72,000 from 79,000.
    • September private sector payrolls increased by 97,000 (Briefing.com consensus: 58,000). August private sector payrolls revised to 18,000 from 38,000. July private sector payrolls revised to 56,000 from 77,000.
    • September unemployment rate was 4.4% (Briefing.com consensus: 4.3%) versus 4.3% in August. Persons unemployed for 27 weeks or more accounted for 23.6% of the unemployed versus 25.7% in August. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 8.0% from 8.1% in August.
    • September average hourly earnings were up 0.2% (Briefing.com consensus: 0.3%) versus an upwardly revised 0.4% increase (from 0.3%) in August. Over the last 12 months, average hourly earnings have risen 3.8% versus 3.8% for the 12 months ending in August.
    • The average workweek in September was 34.2 hours (Briefing.com consensus: 34.3) versus 34.2 hours in August. Manufacturing workweek changed little at 39.9 hours. Factory overtime was unchanged at 2.9 hours.
    • The labor force participation rate increased to 62.4% from 62.3% and the employment-population ratio increased to 59.7% from 59.6%.
  • Initial jobless claims for the week ending November 15 decreased by 8,000 to a lowly 220,000. Continuing jobless claims for the week ending November 8 increased by 28,000 to a not-so-lowly 1.974 million, which is the highest since November 6, 2021.
    • The key takeaway from the report is that it corroborates the low firing, low hiring narrative hanging over the labor market.
  • Existing home sales increased 1.2% month-over-month in October to a seasonally adjusted annual rate of 4.10 million (Briefing.com consensus 4.08 million) from a downwardly revised 4.05 million (from 4.06 million) in September. Sales were up 1.7% on a year-over-year basis.
    • The key takeaway from the report is that home sales in October were aided by lower mortgage rates, yet limited inventory in some regions, combined with high prices in others, got in the way of stronger selling activity.
  • Weekly natural gas inventories decreased by 14 bcf after increasing by 45 bcf a week ago.
• Commodities:
  • WTI crude: -0.4% to $59.03/bbl
  • Gold: -0.6% to $4059.70/ozt
  • Copper: -1.0% to $4.97/lb
• Currencies:
  • EUR/USD: UNCH at 1.1537
  • GBP/USD: +0.2% to 1.3085
  • USD/CNH: UNCH at 7.1171
  • USD/JPY: +0.2% to 157.52
• The Day Ahead:
  • 9:45 ET: Flash November S&P Global U.S. Manufacturing PMI (prior 52.5) and flash November S&P Global U.S. Services PMI (prior 54.8)
  • 10:00 ET: Final November University of Michigan Consumer Sentiment (Briefing.com consensus 50.3; prior 50.3)