Bond Market Update

 Strong Start Ahead

• U.S. Treasuries are on track for a firmly higher start after a steady climb in the overnight futures market. Treasury futures recovered swiftly from yesterday's dip at the close of the cash session, maintaining an upward path through the rest of the night while JGBs also climbed. The gains in Treasury futures, which took place despite a rising price of oil, were encouraged by a poor showing in equities, including U.S. equity futures. Elsewhere, European debt has been mixed with Bunds rising strongly while France's OATs and Italy's BTPs faced pressure. The overnight data flow was on the light side, and things will remain that way during the U.S. session. Crude oil has climbed above $99/bbl while the U.S. Dollar Index is flat at 101.79.
• Yield Check:
  • 2-yr: -9 bps to 4.73%
  • 3-yr: -10 bps to 4.81%
  • 5-yr: -10 bps to 4.87%
  • 10-yr: -10 bps to 5.05%
  • 30-yr: -8 bps to 5.36%

• News:
  • President Trump said that there are no current negotiations with Iran.
  • Bank of Korea left its policy rate unchanged at 3.00%, in line with expectations.
  • Bank Indonesia kept its main policy rate at 5.75% against expectations for a 25-bps increase. The deposit facility rate was increased by 25 bps to 5.00%.
  • The Swiss National Bank's summary of its September monetary policy assessment showed policymakers left the policy rate unchanged at 0%, judging monetary policy appropriate while retaining a willingness to intervene in foreign exchange markets if necessary.
  • Japan's Foreign Bond Buying -JPY161.6 bln (prior -JPY339.9 bln) and Foreign Investment in Japanese Stocks -JPY66.5 bln (prior +JPY3,545.5 bln).
  • China's September FDI -4.3% (prior -5.3%).
  • New Zealand's Q3 CPI +0.7% qtr/qtr (expected +0.8%; prior +1.5%) and +3.7% yr/yr (expected +3.8%; prior +4.1%).
  • Hong Kong's September CPI +0.3% m/m (prior +0.1%) and +1.9% yr/yr (expected +1.8%; prior +1.9%); Unemployment Rate 3.9% (prior 3.8%).
  • France's October Business Survey 105 (expected 101; prior 101).
  • U.K.'s October CBI Industrial Trends Orders -32 (expected -20; prior -9).
  • September car registrations rose 12.0% yr/yr in the U.K., 11.6% in France, 9.8% in Italy, and 9.0% in Germany.
• Commodities:
  • WTI Crude: +2.5% to $99.58/bbl
  • Gold: -1.7% to $4081.10/ozt
  • Copper: -2.5% to $6.414/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1199
  • GBP/USD: -0.1% to 1.3372
  • USD/CNH: UNCH at 6.6737
  • USD/JPY: -0.7% to 157.04
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 200,000; prior 199,000) and Continuing Claims (prior 1.710 mln)
  • 10:00 ET: September Leading Index (Briefing.com consensus -0.2%; prior -0.1%)
  • 10:30 ET: Weekly natural gas inventories (prior 67 bcf)