Bond Market Update

Modest Gains on Tuesday

• U.S. Treasuries recorded modest gains on Tuesday after spending the session in a narrow range near their starting levels. The market followed an uneventful Monday affair with another quiet outing that was free of economic data releases. Furthermore, the overnight session featured the release of just a handful of reports, including South Korea's hotter-than-expected CPI (0.3%; expected 0.0%) for October. Treasuries added to their starting gains in the late morning, spending the remainder of the session just below their highs. The modest advance kept the 10-yr yield just below its 50-day moving average (4.094%) while the 2-yr yield stayed just above the 50-day moving average of its own (3.560%). Crude oil recorded a modest loss, slipping below $61/bbl, while the U.S. Dollar Index rose 0.4% to 100.22.
• Yield Check:
  • 2-yr: -2 bps to 3.58%
  • 3-yr: -2 bps to 3.59%
  • 5-yr: -1 bp to 3.70%
  • 10-yr: -2 bps to 4.09%
  • 30-yr: -2 bps to 4.67%

• News:
  • The Reserve Bank of Australia left its cash rate at 3.60%, as expected, and Governor Bullock left the door open to a potential future change in either direction.
  • British Chancellor Reeves appears to be considering a tax hike to plug a GBP22 bln budget gap while Prime Minister Starmer told members of his party that the Autumn budget will include "tough but fair" decisions.
  • European Central Bank policymaker Rehn said that economic uncertainty remains elevated.
  • European Central Bank policymaker Patsalides said that competitiveness in the EU needs to be improved. 
  • Japan's October Manufacturing PMI hit 48.2 (expected 48.3; last 48.3).
  • South Korea's October CPI was up 0.3% m/m (expected 0.0%; last 0.5%), rising 2.4% yr/yr (expected 2.1%; last 2.1%).
  • France's September government budget deficit reached EUR155.4 bln (last deficit of EUR157.5 bln).
  • Spain's October Unemployment increased by 22,100 (expected 5,200; last -4,800).
• Commodities:
  • WTI crude: -0.7% to $60.58/bbl
  • Gold: -1.3% to $3961.40/ozt
  • Copper: -2.2% to $4.95/lb
• Currencies:
  • EUR/USD: -0.4% to 1.1476
  • GBP/USD: -1.0% to 1.3011
  • USD/CNH: +0.1% to 7.1354
  • USD/JPY: -0.3% to 153.66
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 7.1%)
  • 8:15 ET: October ADP Employment Change (Briefing.com consensus 26,000; prior -32,000)
  • 9:45 ET: Final October S&P Global U.S. Services PMI (prior 54.2)
  • 10:00 ET: October ISM Services (Briefing.com consensus 50.9%; prior 50.0%)
  • 10:30 ET: Weekly crude oil inventories (prior -6.86 mln)