Bond Market Update

Short End Behind

• U.S. Treasuries are staring down another lower start in most tenors after a morning retreat in the futures market. Treasury futures held their ground through the Asian session, which saw a solid showing from JGBs, before giving in to some selling pressure that built around the start of the European session. However, recent action saw some buying in Treasuries and other sovereign debt, thanks in part to a pullback in the price of oil after President Trump said that there has been some progress in talks with Iran. WTI crude is slipping toward $90/bbl while Brent remains above $102/bbl. Today's economic data will be limited to the 10:00 ET release of the preliminary University of Michigan Consumer Sentiment for October (Briefing.com consensus 48.1; prior 48.1). The U.S. Dollar Index is flat at 102.14, holding near its best level since April 2025.
• Yield Check:
  • 2-yr: +2 bps to 4.78%
  • 3-yr: +1 bp to 4.90%
  • 5-yr: +1 bp to 5.00%
  • 10-yr: UNCH at 5.23%
  • 30-yr: -1 bp to 5.60%

• News:
  • Japan's cabinet approved a bill that will lower the food consumption tax.
  • Japan's Finance Minister Katayama said that spending will be reviewed with a focus on public funds and subsidies.
  • The People's Bank of China released a statement, claiming there are no plans to devalue the yuan for trade advantages.
  • China approved fuel export plans for October and established an import quota for 2027.
  • ECB Minutes from the September meeting showed unanimous agreement to increase the interest rate corridor by 25-basis points.
  • Japan's August Household Spending -3.1% yr/yr (expected -3.5%; prior -3.6%) and 0.1% m/m (expected 0.5%; prior 0.5%); September Machine Tool Orders 60.4% yr/yr (prior 64.7%)
  • Italy's August Industrial Production -1.3% m/m (expected 0.0%; prior 0.6%) and 0.0% yr/yr (prior -0.1%)
  • Switzerland's September SECO Consumer Climate -36 (expected -32; prior -33)
• Commodities:
  • WTI Crude: -1.0% to $90.55/bbl
  • Gold: +1.2% to $4206.50/ozt
  • Copper: +2.1% to $6.705/lb
• Currencies:
  • EUR/USD: UNCH at 1.1210
  • GBP/USD: UNCH at 1.3227
  • USD/CNH: -0.2% to 6.6919
  • USD/JPY: +0.3% to 158.25
• Data out Today:
  • 10:00 ET: Preliminary October University of Michigan Consumer Sentiment (Briefing.com consensus 48.1; prior 48.1)