Bond Market Update

Short End Leads

• U.S. Treasuries are on track for a higher start to November with shorter tenors set to lead the early advance while the long bond is a bit behind, tracking a flat start. Treasury futures saw limited movement in overnight action, facing some light early pressure, followed by a bounce at the start of the European session. The night brought the release of final October Manufacturing PMI readings from major economies with South Korea's reading (49.4) showing a return to contraction while China's RatingDog Manufacturing PMI (50.6) reflected a deceleration in the pace of growth. Readings from Europe were mostly better than expected while the eurozone reading (50.0), which reflected a standstill, matched expectations. In other news, the U.S. confirmed that the additional 100% tariff on Chinese imports is being suspended for a year while the overall tariff level has been reduced to 47% from 57%. Crude oil holds a slim loss while the U.S. Dollar Index is up 0.1% at 99.85.
• Yield Check:
  • 2-yr: -2 bps to 3.59%
  • 3-yr: -2 bps to 3.59%
  • 5-yr: -2 bps to 3.70%
  • 10-yr: -1 bp to 4.09%
  • 30-yr: UNCH at 4.67%

• News:
  • The Reserve Bank of Australia will release its latest policy Statement tomorrow, but a rate change is not expected.
  • The European Central Bank's survey of monetary analysts showed expectations for no change in rates until early 2028, followed by rate hikes.
  • The French government is still struggling to reach a budget agreement.
  • OPEC+ agreed to increase its output by 137,000 barrels per day in December, followed by a pause in Q1.
  • China's October RatingDog Manufacturing PMI hit 50.6 (expected 50.7; last 51.2).
  • South Korea's October trade surplus reached $6.06 bln (expected surplus of $2.98 bln; last surplus of $9.53 bln) as imports fell 1.5% yr/yr (expected -1.4%; last 8.2%) and exports rose 3.6% yr/yr (last 12.6%). October Manufacturing PMI hit 49.4 (last 50.7).
  • India's October Manufacturing PMI hit 59.2 (last 58.4).
  • Australia's October Manufacturing PMI hit 49.7 (last 49.7) and October MI Inflation Gauge was up 0.3% m/m (last 0.4%). September Building Approvals rose 12.0% m/m (expected 5.1%; last -3.6%), rising 12.4% yr/yr (last -0.7%). Private House Approvals were up 4.0% m/m (last -1.0%). October Commodity Prices fell 1.3% yr/yr (last 0.1%).
  • New Zealand's September Building Consents rose 7.2% m/m (last 6.1%).
  • Eurozone's October Manufacturing PMI hit 50.0, as expected (last 50.0).
  • Germany's October Manufacturing PMI hit 49.6, as expected (last 49.6).
  • U.K.'s October Manufacturing PMI hit 49.7 (expected 49.6; last 49.7).
  • France's October Manufacturing PMI hit 48.8 (expected 48.3; last 48.8).
  • Italy's October Manufacturing PMI hit 49.9 (expected 49.3; last 49.0).
  • Spain's October Manufacturing PMI hit 52.1 (expected 51.8; last 51.5).
  • Swiss October CPI was down 0.3% m/m (expected -0.1%; last -0.2%) but up 0.1% yr/yr (expected 0.3%; last 0.2%). October Manufacturing PMI hit 48.2 (expected 49.3; last 49.0).
• Commodities:
  • WTI Crude: -0.1% to $60.93/bbl
  • Gold: +0.6% to $4020.00/ozt
  • Copper: +0.1% to $5.096/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1519
  • GBP/USD: -0.1% to 1.3143
  • USD/CNH: +0.1% to 7.1243
  • USD/JPY: +0.1% to 154.16
• Data out Today:
  • 9:45 ET: Final October S&P Global U.S. Manufacturing PMI (prior 52.0)
  • 10:00 ET: September Construction Spending (DELAYED; prior NA) and October ISM Manufacturing Index (Briefing.com consensus 49.4%; prior 49.1%)