Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a slightly higher start in the 2-yr note after a range-bound night. Treasury futures attempted to put together a couple rallies in overnight trade, but both moves ran into resistance that returned action to levels seen last evening. Economic data released overnight included a contractionary Manufacturing PMI from Japan (48.4) and another disappointing business sentiment survey from Germany. The data flow will be light during the U.S. session with the New Home Sales report for August (Briefing.com consensus 650,000) set to be released at 10:00 ET. Later in the day, the U.S. Treasury will sell $70 bln in 5-yr notes. Crude oil is rising toward its 50-day moving average (64.56) while the U.S. Dollar Index is up 0.5% at 97.73.
• Yield Check:
  • 2-yr: -2 bps to 3.57%
  • 3-yr: UNCH at 3.57%
  • 5-yr: UNCH at 3.68%
  • 10-yr: UNCH at 4.12%
  • 30-yr: UNCH at 4.74%

• News:
  • Australia's Prime Minister Albanese will visit the White House on October 20.
  • South Korea's finance minister is expected to meet with Treasury Secretary Bessent in New York.
  • Switzerland's KOF Institute lowered its domestic growth forecast for 2026 to 0.9% from 1.5%.
  • Denmark's central bank lowered its 2025 domestic growth forecast to 2.0% from 3.6% while the outlook for 2026 was cut to 2.0% from 2.3%.
  • Sweden's NIER think thank raised its domestic forecast for 2025 to 0.9% from 0.7% while the outlook for 2026 remained at 2.6%.
  • Japan's flash September Manufacturing PMI hit 48.4 (expected 49.5; last 49.7) and flash Services PMI hit 53.0 (last 53.1). August BoJ Core CPI was up 2.0% yr/yr (expected 1.9%; last 2.0%).
  • South Korea's September Consumer Confidence hit 110.1 (last 111.4).
  • Australia's August Monthly CPI Indicator was up 3.0% (expected 2.9%; last 2.8%).
  • Germany's September ifo Business Climate Index fell to 87.7 from 88.9 (expected 89.3). September Current Assessment fell to 85.7 from 86.4 (expected 86.7) and Business Expectations fell to 89.7 from 91.4 (expected 92.0).
  • Spain's August PPI was down 1.5% yr/yr (last 0.4%).
  • Swiss September ZEW Expectations rose to -46.4 from -53.8.
• Commodities:
  • WTI Crude: +1.1% to $64.12/bbl
  • Gold: -0.4% to $3801.80/ozt
  • Copper: -0.8% to $4.606/lb
• Currencies:
  • EUR/USD: -0.6% to 1.1748
  • GBP/USD: -0.5% to 1.3457
  • USD/CNH: +0.3% to 7.1313
  • USD/JPY: +0.6% to 148.48
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.6%; prior 29.7%)
  • 10:00 ET: August New Home Sales (Briefing.com consensus 650,000; prior 652,000)
  • 10:30 ET: Weekly crude oil inventories (prior -9.29 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results