Bond Market Update

Yields Slipping on Oil

• U.S. Treasuries saw a bid hit earlier this morning when oil prices rolled over. WTI crude futures traded north of $97.00/bbl but are now trading at $93.12/bbl. Similarly, Brent crude futures topped $102.00/bbl but are now at $98.16/bbl. The 10-yr note yield had risen to 4.98% but now sits at 4.93%. The move in oil was catalyzed by a report that Saudi Arabia started operations for its East-West pipeline again, albeit at a slow rate. Also, with the UN General Assembly in full swing today, there is some underlying hope that diplomacy, versus military action, will win out in the U.S.-Iran conflict. Iran has reportedly said it will reopen the Strait of Hormuz within seven days if the U.S. backs off its military pressure. As of now, there is no meeting set between President Trump and the Iranians at the UN. President Trump, after delivering an address to the UN General Assembly at 10:00 a.m. ET, will meet with several Gulf state representatives this afternoon to discuss Iran. The market will take a keen interest in what the president has to say and in the results of the $69 billion 2-yr note auction at 1:00 p.m. ET.
• Yield Check:
  • 2-yr: -2 bps to 4.73%
  • 3-yr: -4 bps to 4.78%
  • 5-yr: -3 bps to 4.80%
  • 10-yr: -3 bps to 4.93%
  • 30-yr: -4 bps to 5.26%

• News:
  • China and the U.S. discussed artificial intelligence and investments on the second day of trade talks. Bloomberg
  • Iran will attend today's UN meeting, as President Trump indicated that major decisions on Iran may be approaching (Note: President Trump will speak at 10:00 AM ET at the UN General Assembly). CNN
  • Secretary of State Marco Rubio on NBC's Today Show says President Trump is open to meeting with the Iranians at the UNGA this week, but no meeting is currently scheduled
  • Iran says it can reopen the Strait of Hormuz within seven days if the U.S. eases military pressure. Reuters
  • Saudi Arabia has restarted the East-West oil pipeline, but the pipeline is pumping at a low rate. Reuters
  • Republicans pressuring President Trump to restrict exports of diesel. Politico
  • Governor Greg Abbott of Texas directs Texas Commission on Environmental Quality to halt all permits sought by data center providers until ERCOT completes its audit
  • CMS announces new preliminary Medicare payment rates for laboratory services
  • Swiss National Bank left its policy rate unchanged at 0.00%, as expected
• Commodities:
  • WTI crude: -2.3% to $93.60/bbl
  • Gold: -0.7% to $4,353.80/ozt
  • Copper: +1.3% to $6.85/lb
• Currencies:
  • EUR/USD: flat at 1.1461
  • GBP/USD: flat at 1.3363
  • USD/CNH: +0.1% to 6.6996
  • USD/JPY: -0.1% to 157.15
• The Day Ahead:
  • There is no U.S. economic data of note
  • 13:00 ET: $69 billion 2-yr note auction