Bond Market Update

Inching Higher Ahead of CPI

• U.S. Treasuries are on track for a modestly higher start ahead of the 8:30 ET release of September CPI (Briefing.com consensus 0.6%; prior 0.4%) and Core CPI (Briefing.com consensus 0.2%; prior 0.3%), a report that will quickly be dissected for its potential rate-hike implications. The modestly higher start will follow a night that saw a steady rise in Treasury prices through the Asian session, with the market holding near highs during European trade. Economic data released overnight showed a larger-than-expected September trade surplus from China while CPI growth remained mild, leaving the year-over-year CPI rate at 0.9%. Crude oil climbed past $95/bbl overnight, reaching levels last seen about three weeks ago. The U.S. Dollar Index is up 0.1% at 102.24.
• Yield Check:
  • 2-yr: -1 bp to 4.78%
  • 3-yr: -2 bps to 4.90%
  • 5-yr: -2 bps to 4.99%
  • 10-yr: -2 bps to 5.20%
  • 30-yr: -1 bp to 5.55%

• News:
  • The Monetary Authority of Singapore made no changes to its policy stance against expectations for tightening.
  • South Korea may reduce its debt issuance by up to KRW10 trln.
  • European Central Bank President Lagarde repeated that second-round effects of inflation are not being seen.
  • European Central Bank policymaker Wunsch said that the ECB will probably have to implement another rate hike.
  • Germany's Economic Ministry noted that the momentum in the German economy likely slowed in Q3.
  • China's September CPI 0.2% m/m (expected 0.3%; prior 0.4%) and 0.9% yr/yr (expected 1.0%; prior 0.8%); PPI 5.0% yr/yr (expected 4.4%; prior 3.8%). September Trade Balance $133.53 bln (expected $116.80 bln; prior $119.09 bln); Exports 36.3% yr/yr (expected 25.5%; prior 25.0%) and Imports 31.0% yr/yr (expected 24.5%; prior 28.2%). September New Loans CNY1.080 trln (expected CNY1.025 trln; prior CNY60.0 bln); Total Social Financing CNY3.550 trln (expected CNY3.270 trln; prior CNY1.660 trln); M2 Money Supply 7.2% yr/yr (expected 7.4%; prior 7.5%) and Outstanding Loan Growth 4.8% yr/yr (expected 4.8%; prior 4.9%).
  • India's September WPI Inflation 11.39% yr/yr (expected 10.18%; prior 9.92%); Manufacturing Inflation 9.76% (prior 8.37%), Food Inflation 8.14% (prior 5.67%), and Fuel Inflation 25.85% (prior 22.93%).
  • Germany's September WPI 1.9% m/m (expected 0.6%; prior 0.9%) and 8.7% yr/yr (prior 6.8%).
  • Spain's September CPI 0.3% m/m (expected 0.3%; prior 0.7%) and 4.9% yr/yr (expected 4.9%; prior 4.3%); Core CPI 3.1% yr/yr (expected 3.1%; prior 2.9%); HICP 0.6% m/m (expected 0.6%; prior 0.7%) and 5.0% yr/yr (expected 5.0%; prior 4.6%).
• Commodities:
  • WTI Crude: +1.9% to $95.93/bbl
  • Gold: -0.4% to $4160.90/ozt
  • Copper: +0.2% to $6.742/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1193
  • GBP/USD: +0.1% to 1.3265
  • USD/CNH: UNCH at 6.6940
  • USD/JPY: +0.1% to 158.44
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -2.7%; prior -4.2%)
  • 8:30 ET: September CPI (Briefing.com consensus 0.6%; prior 0.4%) and Core CPI (Briefing.com consensus 0.2%; prior 0.3%)
  • 14:00 ET: October Beige Book