Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a slightly higher start in shorter tenors after a night that saw weakness in global equity markets with Japan's Nikkei (-2.5%) and South Korea's Kospi (-2.9%) deepening their reversals from record highs. Treasury futures climbed in early evening action before spending the remainder of the night in a slow retreat from their overnight highs. Final October Services PMI readings from major economies showed above-consensus growth in the eurozone (53.0; expected 52.6) while the U.S. session will also feature the release of the final Services PMI for October, followed by the October ISM Services index at 10:00 ET (Briefing.com consensus 50.9%; prior 50.0%). Crude oil holds a modest loss while the U.S. Dollar Index is down 0.1% at 100.17.
• Yield Check:
  • 2-yr: -1 bp to 3.57%
  • 3-yr: -1 bp to 3.58%
  • 5-yr: -1 bp to 3.69%
  • 10-yr: -1 bp to 4.08%
  • 30-yr: UNCH at 4.67%

• News:
  • The Times shadow Monetary Policy Committee voted 5-4 in favor of the Bank of England keeping its bank rate at 4.00% ahead of tomorrow's official decision.
  • The European Central Bank's wage tracker forecast a 2.2% increase in Q3 wages after a 1.8% increase in Q2.
  • European Central Bank policymakers Nagel and Villeroy de Galhau cautioned against complacency on the part of policymakers.
  • China's October RatingDog Services PMI hit 52.6 (expected 52.5; last 52.9).
  • Japan's October Monetary Base was down 7.9% yr/yr (expected -4.8%; last -6.1%).
  • Hong Kong's October Manufacturing PMI hit 51.2 (last 50.4).
  • Singapore's September Retail Sales were down 1.4% m/m (last 0.7%) but up 2.8% yr/yr (last 5.3%).
  • Eurozone's October Services PMI hit 53.0 (expected 52.6; last 51.3). September PPI -0.1% m/m (expected 0.0%; last -0.4%); -0.2% yr/yr, as expected (last -0.6%).
  • Germany's September Factory Orders rose 1.1% m/m (expected 0.9%; last -0.4%). October Services PMI hit 54.6 (expected 54.5; last 51.5).
  • U.K.'s October Services PMI hit 52.3 (expected 51.1; last 50.1).
  • France's September Industrial Production rose 0.8% m/m (expected 0.1%; last -0.9%). October Services PMI hit 48.0 (expected 47.1; last 48.5).
  • Italy's October Services PMI hit 54.0 (expected 53.0; last 52.5). September Retail Sales were down 0.5% m/m (expected 0.2%; last -0.2%) but up 0.5% yr/yr (last 0.6%).
  • Spain's October Services PMI hit 56.6 (expected 54.8; last 54.3).
• Commodities:
  • WTI Crude: -0.3% to $60.41/bbl
  • Gold: +0.4% to $3975.60/ozt
  • Copper: -0.2% to $4.938/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1488
  • GBP/USD: +0.2% to 1.3042 
  • USD/CNH: UNCH at 7.1313
  • USD/JPY: +0.1% to 153.72
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.9%; 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)