Bond Market Update

Seeking Higher Start After Holiday Pause

• U.S. Treasuries are on track for a firmly higher start in longer tenors while the short end is set to show some early relative weakness, though the entire complex is expected to begin the cash session in the green. Treasury futures climbed last evening, adding to their gains during the past hour. Other sovereign debt has also advanced while crude oil has faced some pressure, giving back the bulk of yesterday's gain. The retreat in oil has been assisted by President Trump repeating that the war with Iran will end soon and that energy prices will retreat once the conflict is over. JGBs and the yen saw some strength after a Bloomberg report that the Bank of Japan may forego against another rate hike this month but could still adjust the language in its statement pertaining to the 2.0% inflation target. Crude oil has returned toward $92/bbl while the U.S. Dollar Index is down 0.3% at 102.29.
• Yield Check:
  • 2-yr: -2 bps to 4.77%
  • 3-yr: -4 bps to 4.89%
  • 5-yr: -4 bps to 4.98%
  • 10-yr: -5 bps to 5.19%
  • 30-yr: -5 bps to 5.55%

• News:
  • Visa (V) received approval to set the groundwork for a bank card clearing facility in China.
  • A Bank of Japan survey showed that Japanese households expect prices to rise by an average of 11.8% a year from now.
  • The IMF began its semi-annual meetings yesterday, which will continue through Sunday. The Fund raised its 2026 global growth target to 3.1% from 3.0% and kept the forecast for 2027 at 3.4%.
  • The Reserve Bank of Australia expressed concern in its minutes that pausing hikes while global rates are on the rise would exert downward pressure on the Australian dollar.
  • Japan's September PPI -0.3% m/m (expected 0.5%; prior -0.3%) and 6.8% yr/yr (expected 7.6%; prior 7.6%); Bank Lending 5.3% yr/yr (expected 5.5%; prior 5.3%).
  • Australia's September NAB Business Confidence -13 (prior -9) and NAB Business Survey -1 (prior -1).
  • Germany's September CPI 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%); HICP 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%).
  • U.K.'s September BRC Retail Sales Monitor 1.0% yr/yr (expected 0.8%; prior 0.5%).
• Commodities:
  • WTI Crude: -1.2% to $92.60/bbl
  • Gold: +0.5% to $4209.70/ozt
  • Copper: +0.1% to $6.755/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1188
  • GBP/USD: +0.3% to 1.3246
  • USD/CNH: UNCH at 6.6919
  • USD/JPY: -0.3% to 158.13
• Data out Today:
  • 6:00 ET: September NFIB Small Business Optimism (actual 97.9; Briefing.com consensus 98.0; prior 98.7)
  • 10:00 ET: September Existing Home Sales (Briefing.com consensus 3.96 mln; prior 3.98 mln)
  • 14:00 ET: September Treasury Budget (prior -$166.8 bln)