Bond Market Update

Dipping Ahead of August CPI

• U.S. Treasuries are on track for a modestly lower start ahead of the 8:30 ET release of August CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%) that will follow yesterday's release of a cool PPI report. Treasury futures spent the night in a narrow range through a night that featured just a small batch of data and news developments. There was an uptick in expectations for a rate hike from the Bank of Japan by the end of the year while the European Central Bank will release its latest policy statement at 8:15 ET, but a cut is not expected at this time. Crude oil is pulling back after three days of gains while the U.S. Dollar Index is up 0.2% at 97.99.
• Yield Check:
  • 2-yr: +2 bps to 3.55%
  • 3-yr: +2 bps to 3.51%
  • 5-yr: +2 bps to 3.60%
  • 10-yr: +2 bps to 4.05%
  • 30-yr: +2 bps to 4.70%

• News:
  • The Bank of Japan is reportedly preparing to start selling ETFs as part of its portfolio unwind.
  • Mexico will increase its tariff on imports of vehicles from Asia to 50% from 20%.
  • Germany's association of exporters expects 2025 export growth of just 2.5% while imports are expected to show 4.5% growth.
  • Volkswagen pledged to resist China's entry into the European market.
  • Japan's Q3 BSI Large Manufacturing Conditions rose to 3.8 from -4.8 (expected -3.3). August PPI was down 0.2% m/m (expected -0.1%; last 0.3%) but up 2.7% yr/yr, as expected (last 2.5%).
  • Australia's September MI Inflation Expectations rose to 4.7% from 3.9%.
• Commodities:
  • WTI Crude: -1.1% to $62.98/bbl
  • Gold: -0.8% to $3653.30/ozt
  • Copper: -0.2% to $4.608/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1689
  • GBP/USD: UNCH at 1.3519 
  • USD/CNH: +0.1% to 7.1228
  • USD/JPY: +0.4% to 147.96
• Data out Today:
  • 8:30 ET: August CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.3%), weekly Initial Claims (Briefing.com consensus 240,000; prior 237,000), and Continuing Claims (prior 1.940 mln)
  • 10:30 ET: Weekly natural gas inventories (prior +55 bcf)
  • 14:00 ET: August Treasury Budget (prior -$291.1 bln)
• Treasury Auctions:
  • 13:00 ET: $22 bln 30-yr Treasury bond reopening result