Bond Market Update

Holding Firm

• U.S. Treasuries are firmer, having avoided follow-through selling interest during the overnight trade. Yields are slightly lower across the curve, supported by some expected weakness in the stock market at today's open that is being presaged by the weakness in the equity futures trade. Chatter about a possible government shutdown on October 1 and the Trump administration announcing a one-time $100,000 fee for new petitions for H-1B visas has helped shape the morning news narrative, along with the PBOC's expected decision to leave its one-year and five-year loan prime rates unchanged at 3.00% and 3.50%, respectively. There isn't any economic data of note, but the August Personal Income and Spending Report, which contains the PCE Price Index-- the Fed's preferred inflation gauge-- awaits at the end of the week.
• Yield Check:
  • 2-yr: -1 bp to 3.57%
  • 3-yr: -2 bps to 3.55%
  • 5-yr: -1 bp to 3.68%
  • 10-yr: -1 bp to 4.13%
  • 30-yr: -1 bp to 4.75%

• News:
  • The Trump administration announced there will be a $100,000 fee for H-1B visas. The fee is a one-time fee (not per year) and applies to new petitions (not existing H-1B visa holders).
  • Democratic leadership requested a meeting with President Trump ahead of the government fund deadline. President Trump said he would "love to meet with them, but I don't think it's going to have any impact." Politico
  • President Trump will address the United Nations tomorrow and meet with Ukrainian President Volodymyr Zelensky tomorrow. The Hill
  • The Trump administration blocks U.S. Steel from closing Illinois plant. WSJ
  • PBOC left the one-year loan prime rate and five-year loan prime rate unchanged at 3.00% and 3.50%, respectively, as expected
  • ECB member Stoumaras suggested the rate cut cycle is likely over, barring a big drop in growth or inflation
  • Porsche cited the impact of tariffs, weak EV demand, and a slowdown in China as the basis for cutting its sales return outlook and tempering its operating profit expectations.
  • Check-in operations at airports in London, Berlin, Brussels, and Dublin were disrupted following a cyberattack on Collins Aerospace
  • Cryptocurrency traders had $1.5 bln in bets liquidated. Bloomberg
• Commodities:
  • WTI crude: -0.4% to $62.41/bbl
  • Gold: +1.5% to $3760.90/ozt
  • Copper: +0.3% to $4.64/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1777
  • GBP/USD: +0.2% to 1.3495
  • USD/CNH: -0.1% to 7.1146
  • USD/JPY: -0.1% to 147.84
• The Day Ahead:
  • There is no U.S. economic data of note today