Bond Market Update

Treasuries Climb With Overseas Help

• U.S. Treasuries climbed on Thursday with the long bond extending its modest post-FOMC advance while the front end recovered a portion of its loss from Wednesday. The 10-yr note and shorter tenors finished essentially where they started after a rally in the Treasury futures market, which received overnight support from a pullback in the price of oil and a secondary morning boost from news that the Bank of England will halt sales of longer-dated Gilts. That announcement was released alongside the central bank's decision to hold its bank rate at 3.75%, and it contributed to some general strength in longer-dated sovereign debt. The 10-yr note and shorter tenors spent the rest of the day in a sideways range while the long bond extended its starting gain slightly as the day went on. Economic data released today did not contain any big surprises, as jobless claims remained inside a well-established range while August Housing Starts (1.275 mln; Briefing.com consensus 1.325 mln; prior 1.309 mln) and Building Permits (1.394 mln; Briefing.com consensus 1.410 mln; prior 1.433 mln) were on the weaker side. Crude oil recovered the bulk of its overnight loss as the day went on while the U.S. Dollar Index faced some intraday pressure before returning to little changed at 100.25.
• Yield Check:
  • 2-yr: -4 bps to 4.69%
  • 3-yr: -5 bps to 4.76%
  • 5-yr: -6 bps to 4.80%
  • 10-yr: -6 bps to 4.95%
  • 30-yr: -5 bps to 5.30%

• News:
  • The Atlanta Fed's GDPNow forecast for Q3 GDP remained at 5.1% in the latest estimate.
  • The Hong Kong Monetary Authority followed the Fed's rate hike with a 25-basis point increase of its own to 4.25%.
  • China's foreign minister called for the U.S. and Iran to exercise rationality after his meeting with Iran's foreign minister.
  • European Central Bank policymaker Makhlouf repeated that second-round effects of inflation are not being seen.
  • Switzerland raised its 2026 growth forecast to 1.7% from 0.9% while the 2027 outlook remained at 1.6%.
  • Hong Kong's August Unemployment Rate rose to 3.8% from 3.7%.
  • Singapore's August trade surplus reached SGD13.78 bln (last surplus of SGD10.898 bln) as non-oil exports rose 10.9% m/m (last -0.3%), jumping 46.2% yr/yr (expected 35.0%; last 24.1%).
  • New Zealand's Q2 GDP expanded 0.2% qtr/qtr (expected 0.1%; last 0.9%), growing 2.6% yr/yr (expected 2.3%; last 1.7%). Q2 GDP Expenditure was up 0.4% qtr/qtr (last 1.1%).
  • Eurozone's August CPI was up 0.4% m/m (expected 2.9%; last 0.2%), rising 3.2% yr/yr (expected 3.3%; last 2.9%). August Core CPI was up 0.2% m/m, as expected (last 0.0%), rising 2.4% yr/yr, as expected (last 2.5%).
  • Swiss August trade surplus reached CHF3.786 bln (last surplus of CHF5.742 bln).
• Today's Data:
  • Initial jobless claims for the week ending September 12 decreased by 10,000 to 196,000 (Briefing.com consensus: 209,000). Continuing jobless claims for the week ending September 5 decreased by 39,000 to 1.730 million. 
    • The key takeaway from the report is the remarkably low level of initial jobless claims, which suggests a low-firing environment.
  • Housing starts declined 2.6% month-over-month in August to a seasonally adjusted annual rate of 1.275 million (Briefing.com consensus: 1.325 million), although single-unit starts were up 7.6%. Building permits declined 2.7% month-over-month to a seasonally adjusted annual rate of 1.394 million (Briefing.com consensus: 1.410 million).
    • The key takeaway from the report is that building permits—a leading indicator—were flat to down across all regions for single-unit dwellings.
  • The Philadelphia Fed Index fell to 37.8 for September (Briefing.com consensus: 35.0) from 47.4 in August.
    • The key takeaway from the report is that the prices paid index jumped eight points to 48.6, while the prices received index hit its highest point (31.3) since April.
  • Pending Home Sales rose 0.3% month-over-month in August Briefing.com consensus 0.5%) while the July decrease was revised down to 2.6% from -2.5%.
  • Weekly natural gas inventories increased by 44 bcf after increasing by 40 bcf a week ago.
• Commodities: 
  • WTI crude: -0.4% to $102.03/bbl
  • Gold: +0.3% to $4400.30/ozt
  • Copper: +2.3% to $6.66/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1477
  • GBP/USD: -0.2% to 1.3354
  • USD/CNH: -0.1% to 6.7037 
  • USD/JPY: -0.2% to 156.02
• The Day Ahead:
  • 9:15 ET: August Industrial Production (Briefing.com consensus 0.3%; prior 1.1%) and Capacity Utilization (Briefing.com consensus 76.4%; prior 76.3%)
  • 10:00 ET: August Leading Index (Briefing.com consensus 0.2%; prior 0.2%)