Bond Market Update

A Dubious Catalyst

• U.S. Treasuries are attempting to settle down after some quick-footed selling this week. Lower oil prices are lending some early support, although that seems to be a dubious catalyst given that the drop in prices stems from an offer by Iran to reopen the Strait of Hormuz within seven days if the U.S. accepts its conditions (which haven't changed, and yet here we are). Global bond yields, in general, have a calmer disposition this morning, creating some hope that they might recover a bit from a short-term oversold condition. Nonetheless, high debt loads, stubbornly high inflation, and increased issuance (both government and corporate) remain key overhangs.
• Yield Check:
  • 2-yr: -2 bps to 4.89%
  • 3-yr: -2 bps to 4.97%
  • 5-yr: -1 bp to 5.03%
  • 10-yr: -1 bp to 5.17%
  • 30-yr: unch at 5.47%

• News:
  • Iranian Foreign Minister Abbas Araghchi presented a new proposal to the U.S. that would open the Strait of Hormuz within 7 days and restart negotiations toward a "final deal." A White House official responded and said it is in a strong position and is in no rush. CNN
  • 60 commercial vessels passed through the Strait of Hormuz Wednesday, the highest volume since July. Times of Israel
  • Gulf allies want President Trump to keep pressure on Iran. WSJ
  • President Trump's summit with Chinese President Xi yielded few outcomes. WSJ
  • Senate Republicans planning vote on House-passed data center Ratepayer Protection Act next week. Politico
  • Japan Prime Minister Sanae Takaichi says undervalued currency is "problematic," according to Bloomberg
  • Fed making plans to increase bank oversight thresholds. Reuters
  • 30-year fixed mortgage rate reaches 7.45%. CNBC
• Commodities:
  • WTI crude: -2.2% to $92.51/bbl
  • Gold: +1.1% to $4,345.20/ozt
  • Copper: flat at $6.78/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1407
  • GBP/USD: +0.2% to 1.3253
  • USD/CNH: +0.1% to 6.7219
  • USD/JPY: -0.7% to 157.67
• The Day Ahead:
  • 08:30 ET: August Durable Goods Orders (Briefing.com consensus: -0.4%; prior 1.1%) and Orders, Excluding Transportation (Briefing.com consensus: 0.5%; prior 0.4%)
  • 10:00 ET: September University of Michigan Consumer Sentiment - Final (Briefing.com consensus: 47.8; prior 47.8)