Bond Market Update

Sliding Again

• U.S. Treasuries are on track for a lower start after a steady overnight slide in the futures market. Treasury futures began inching lower in early evening action, continuing their retreat into the night. The market reached lows around 7:00 ET, followed by a shallow bounce. The overnight selling took place alongside a renewed rally in oil and amid overall pressure on sovereign debt. Japanese JGBs bucked the trend, showing some relative strength, with help from a good 30-yr JGB auction. European debt, however, has faced continued pressure, with France's OATs approaching lows from last week. There were no big surprises in the overnight batch of economic data while the U.S. slate will include weekly Initial Claims (Briefing.com consensus 200,000; prior 197,000) and Continuing Claims (prior 1.701 mln) at 8:30 ET, followed by August Wholesale Inventories (Briefing.com consensus 0.7%; prior 1.3%) at 10:00 ET. The U.S. Treasury will cap this week's note and bond offering slate with a $22 bln 30-yr bond reopening, which is likely to draw some increased attention. Crude oil has bounced off its 50-day moving average (89.13) to a one-week high while the U.S. Dollar Index is up 0.2% at 102.40.
• Yield Check:
  • 2-yr: +4 bps to 4.81%
  • 3-yr: +5 bps to 4.96%
  • 5-yr: +5 bps to 5.07%
  • 10-yr: +5 bps to 5.33%
  • 30-yr: +4 bps to 5.70%

• News:
  • Japan's Prime Minister Takaichi restated her aim to keep JGB sales around JPY40 trln.
  • China rejected EU's request to limit exports of hybrid vehicles.
  • Australia's securities regulator ordered three private credit funds to stop raising capital due to concerns about the quality of disclosure documents.
  • French Finance Minister Lescure said that investors are still demanding French debt.
  • Japan's August Current Account JPY4.062 trln (expected JPY3.194 trln; prior JPY2.989 trln) and Adjusted Current Account JPY2.98 trln (expected JPY2.14 trln; prior JPY2.52 trln); September Economy Watchers Current Index 47.0 (expected 46.7; prior 46.4).
  • Hong Kong's September S&P Global PMI 49.2 (prior 49.5).
  • Australia's October MI Inflation Expectations 5.3% (prior 4.9%).
  • South Korea's August Current Account $46.11 bln (prior $42.08 bln).
  • Germany's August Trade Balance EUR19.5 bln (expected EUR19.0 bln; prior EUR21.6 bln); Exports -0.8% m/m (expected 0.8%; prior -0.5%) and Imports 0.9% m/m (expected 2.8%; prior -5.5%); September Car Registrations 9.0% yr/yr (prior 2.6%).
• Commodities:
  • WTI Crude: +4.6% to $92.33/bbl
  • Gold: +0.2% to $4147.80/ozt
  • Copper: -0.3% to $6.63/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1178
  • GBP/USD: -0.1% to 1.3195
  • USD/CNH: UNCH at 6.7048
  • USD/JPY: +0.2% to 158.28
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 200,000; prior 197,000), Continuing Claims (prior 1.701 mln)
  • 10:00 ET: August Wholesale Inventories (Briefing.com consensus 0.7%; prior 1.3%)
  • 10:30 ET: Weekly natural gas inventories (prior +64 bcf)
• Treasury Auctions:
  • 13:00 ET: $22 bln 30-yr Treasury bond reopening results