Bond Market Update

Long End Leads

• U.S. Treasuries are on track for a higher start after a steady overnight rise in the futures market. Treasury futures began climbing in early evening trade, accelerating their advance at the start of the European session. The gains have been accompanied by a rise in other sovereign debt while equity markets have also had a generally positive showing. Economic data released overnight showed that China's industrial profit turned positive for the year in August, though profits of state-owned enterprises are still expected to be down for the calendar year. The domestic data slate will be limited to the 10:00 ET release of August Pending Home Sales (Briefing.com consensus 0.4%; prior -0.4%). President Trump is expected to meet with congressional leaders in a bid to avoid a shutdown on October 1. Crude oil is back to its 50-day moving average (64.44) while the U.S. Dollar Index is down 0.1% at 98.01.
• Yield Check:
  • 2-yr: -2 bps to 3.63%
  • 3-yr: -3 bps to 3.63%
  • 5-yr: -3 bps to 3.74%
  • 10-yr: -4 bps to 4.15%
  • 30-yr: -5 bps to 4.72%

• News:
  • Securities and Exchange Commission Chair Atkins said that a proposal to allow semi-annual reporting of earnings is being fast tracked.
  • OPEC+ is expected to announce an output increase in November.
  • Japan's LDP leadership election will take place on Saturday and there is still no clear frontrunner.
  • China Securities Times reported that banks are facing increasingly challenging bond market conditions going into the end of the quarter, prompting some hedging activity.
  • Spain saw its credit rating upgraded by Fitch, Moody's, and S&P over the weekend.
  • European Central Bank policymaker Makhlouf said that the central bank is near the bottom of its easing cycle.
  • China's August Industrial Profit 0.9% YTD (last -1.7%)
  • Japan's July Leading Index 106.1 (expected 105.9; last 105.0) and Coincident Indicator -1.8% m/m (expected -2.6%; last 0.7%)
  • India's August Industrial Production 4.0% yr/yr (expected 5.0%; last 3.5%) and August Manufacturing Output 3.8% m/m (last 5.4%)
  • Eurozone's September Business and Consumer Survey rose to 95.5 from 95.3 (expected 95.2).
  • U.K.'s August Mortgage Lending reached GBP4.31 bln (expected GBP4.80 bln; last GBP4.51 bln) and net Lending to Individuals reached GBP6.00 bln (expected GBP6.30 bln; last GBP6.14 bln).
  • Italy's August non-EU trade surplus reached EUR1.78 bln (last surplus of EUR5.99 bln).
  • Spain's September CPI was down 0.4% m/m (expected -0.2%; last 0.0%) but up 2.9% yr/yr (expected 3.1%; last 2.7%). September Core CPI was up 2.3% yr/yr (last 2.4%). August Retail Sales rose 4.5% yr/yr (last 4.7%).
• Commodities:
  • WTI Crude: -1.9% to $64.49/bbl
  • Gold: +1.2% to $3854.70/ozt
  • Copper: +1.2% to $4.829/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1714
  • GBP/USD: +0.2% to 1.3430
  • USD/CNH: -0.2% to 7.1264
  • USD/JPY: -0.5% to 148.71
• Data out Today:
  • 10:00 ET: August Pending Home Sales (Briefing.com consensus 0.4%; prior -0.4%)