Bond Market Update

Recent Gains Trimmed

• U.S. Treasuries gave back some of last week's gains on Monday, after a modestly higher start ran into immediate selling pressure that continued throughout the morning, leaving the market near lows at the close. Treasuries started the day with modest gains across the curve after overnight action saw gains in some international tech stocks, which gave a boost to overall investor sentiment. There was also some overnight pressure on the price of oil, which briefly dipped below $100/bbl amid some speculation about another U.S.-Iran deal taking shape, but a lack of follow-up reports invited an intraday rally that returned oil toward its high from September (106.75). On a related note, Russia's President Putin proposed a summit with President Trump and China's President Xi to find a way to end the war in Ukraine, which would also alleviate some pressure off the global oil supply, but it remains to be seen if the summit materializes and whether it produces the desired outcome. Treasuries retreated into the early afternoon, though yields on 10s and shorter tenors managed a close below their highs from Friday while the 30-yr yield ended the day about a basis point above its highest level from the last session. Crude oil climbed for the eighth day in a row while the U.S. Dollar Index rose 0.1% to 101.97.
• Yield Check:
  • 2-yr: +2 bps to 4.76%
  • 3-yr: +2 bps to 4.85%
  • 5-yr: +3 bps to 4.93%
  • 10-yr: +4 bps to 5.14%
  • 30-yr: +4 bps to 5.47%

• News:
  • Anthropic said that it will allocate 5% of its shares to initiate a public benefit fund.
  • Bank of America expects the FOMC to announce a 25-basis point hike this month.
  • Bank of Japan Governor said that Japan's underlying inflation is quite close to the 2.0% target.
  • Reserve Bank of Australia Governor Kent said that there is evidence that neutral rates are increasing in Australia and abroad.
  • China's Q3 GDP 1.2% qtr/qtr (expected 1.1%; prior 0.9%) and 4.5% yr/yr (expected 4.4%; prior 4.3%). September Industrial Production 5.5% yr/yr (expected 5.4%; prior 5.2%); Retail Sales 1.1% yr/yr (expected 0.5%; prior 0.4%); Fixed Asset Investment -7.2% yr/yr (expected -7.3%; prior -7.2%); Unemployment Rate 5.2% (expected 5.3%; prior 5.3%). September House Prices -2.8% yr/yr (prior -3.0%).
  • Japan's August Tertiary Industry Activity Index -4.10 (prior 0.70).
  • New Zealand's September Performance of Services Index 50.9 (prior 51.0); Trade Balance -NZD1.971 bln (expected -NZD775 mln; prior -NZD1.536 bln), with exports of NZD6.47 bln (prior NZD6.48 bln) and imports of NZD8.44 bln (prior NZD8.02 bln).
  • U.K.'s October Rightmove House Price Index +1.0% m/m (prior +0.7%) and -0.1% yr/yr (prior -0.8%).
• Today's Data:
  • The NAHB Housing Market Index fell to 29 in October (Briefing.com consensus 31) from 32 in September.
• Commodities:
  • WTI crude: +1.8% to $103.24/bbl
  • Gold: -0.5% to $4160.10/ozt
  • Copper: +0.2% to $6.58/lb
• Currencies: 
  • EUR/USD: -0.2% to 1.1212
  • GBP/USD: -0.2% to 1.3304
  • USD/CNH: UNCH at 6.6824
  • USD/JPY: +0.4% to 158.52
• The Day Ahead:
  • 8:30 ET: September Housing Starts (Briefing.com consensus 1.305 mln; prior 1.275 mln) and Building Permits (Briefing.com consensus 1.390 mln; prior 1.394 mln)
  • 10:00 ET: September Pending Home Sales (Briefing.com consensus 0.1%; prior 0.3%)