Bond Market Update

Inching Higher Ahead of Jobs Report

• U.S. Treasuries are on track for a flat start ahead of the 8:30 ET release of the Employment Situation report for September, which could invite some early volatility to follow yesterday's setting of yet another round of fresh 2026 highs in yields on 5s and longer tenors. Overnight action unfolded inside a narrow range, due in part to holiday closures in China and India. Treasuries inched higher while other sovereign debt was mixed, as JGBs faced some pressure, especially on the longer end, while European debt has shown some strength with Germany's bunds extending this week's bounce off 2026 lows. The overnight session featured the release of September CPI readings from Japan and the eurozone with Japan's Tokyo Core CPI accelerating to 2.7% yr/yr from 1.8% while eurozone's headline CPI jumped to 3.8% yr/yr from 3.2% in August. Crude oil has slipped toward its 50-day moving average (88.60) while the U.S. Dollar Index is down 0.1% at 102.01, ticking down from its highest level since April 2025.
• Yield Check:
  • 2-yr: -2 bps to 4.77%
  • 3-yr: -1 bp to 4.89%
  • 5-yr: -3 bps to 4.98%
  • 10-yr: -3 bps to 5.21%
  • 30-yr: -1 bp to 5.59%

• News:
  • Japan's Prime Minister Takaichi reassured that total annual issuance of JGBs will be controlled appropriately, repeating that negative impacts from fiscal policy will not be allowed.
  • South Korea's finance ministry noted that bond issuance will be reduced if needed.
  • European Central Bank policymaker Rehn said that higher longer-term rates are expected o slow growth.
  • Japan's September Tokyo CPI was up 2.7% yr/yr (prior 1.9%); Tokyo Core CPI was up 2.7% yr/yr (expected 2.4%; prior 1.8%); Tokyo CPI ex-food and energy was up 2.7% yr/yr (prior 1.4%); August Unemployment Rate rose to 2.5% from 2.4% (expected 2.4%).
  • South Korea's September CPI was up 0.3% m/m (expected 0.4%; prior 0.2%), rising 2.9% yr/yr (expected 2.9%; prior 3.1%).
  • Eurozone's September CPI was up 0.6% m/m (prior 0.4%), rising 3.8% yr/yr (expected 3.7%; prior 3.2%); Core CPI was up 0.2% m/m (prior 0.2%), rising 2.5% yr/yr (expected 2.5%; prior 2.4%).
  • Spain's September Unemployment increased by 23.6K (expected 17.6K; prior 44.4K).
  • Italy's August Retail Sales rose 0.3% m/m (expected -0.1%; prior -0.4%), climbing 0.5% yr/yr (prior 1.0%).
• Commodities:
  • WTI Crude: -3.8% to $89.35/bbl
  • Gold: +0.1% to $4208.30/ozt
  • Copper: +0.4% to $6.56/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1233
  • GBP/USD: +0.1% to 1.3205
  • USD/CNH: -0.1% to 6.7074
  • USD/JPY: -0.3% to 157.64
• Data out Today:
  • 8:30 ET: September Nonfarm Payrolls (Briefing.com consensus 100,000; prior 162,000), Nonfarm Private Payrolls (Briefing.com consensus 100,000; prior 127,000), Unemployment Rate (Briefing.com consensus 4.1%; prior 4.1%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), and Average Workweek (Briefing.com consensus 34.3; prior 34.4)
  • 10:00 ET: August Factory Orders (Briefing.com consensus 0.0%; prior 0.9%)