Bond Market Update

Rebound Action

• U.S. Treasuries drew some buying interest in the overnight trade that coincided with falling oil prices as reports indicated oil exports from the Middle East hit a post-war high. Brent crude futures are down 1.0% to $96.88/bbl, while WTI crude futures are down 1.1% to $91.56/bbl. There aren't any other clear catalysts to account for the positive price action, which could also be a case of rebounding from a short-term oversold condition. The questions are, will the rebound action persist or will secular drivers win out and trigger a reversal of the overnight gains, irrespective of lower oil prices? For now, there is a bid in sovereign bond markets, all of which are seemingly ripe for some technical buying interest. The Reserve Bank of Australia is the latest central bank to hike interest rates. Its cash rate was bumped up 25 basis points to 4.60%, as expected. 
• Yield Check:
  • 2-yr: -3 bps to 4.90%
  • 3-yr: -3 bps to 4.98%
  • 5-yr: -3 bps to 5.04%
  • 10-yr: -4 bps to 5.21%
  • 30-yr: -3 bps to 5.54%

• News:
  • Middle Eastern oil exports reach highest level since the Iran war began. Iran appears to be losing its leverage over the Strait of Hormuz. WSJ
  • U.S. and Iranian officials complained about each other's stances during mediator meetings (USO, XLE). Politico
  • China planning to introduce additional measures to support the economy (FXI). Bloomberg
  • OpenAI decided against releasing latest artificial intelligence model due to safety concerns. WSJ
  • President Trump meeting with AI executives today for meeting that will focus on finding balance between AI safety and innovation.
  • Automakers are introducing fewer new models. WSJ
  • Anthropic will warn in IPO filing that AI poses "existential risks to humanity." Reuters
• Commodities:
  • WTI crude: -1.0% to $91.69/bbl
  • Gold: +0.6% to $4,192.00/ozt
  • Copper: -0.1% to $6.63/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1348
  • GBP/USD: -0.1% to 1.3240
  • USD/CNH: -0.1% to 6.7049
  • USD/JPY: -0.1% to 157.28
• The Day Ahead:
  • 09:00 ET: July FHFA Housing Price Index (prior 0.0%)
  • 09:00 ET: July S&P Case-Shiller Home Price Index (prior 2.1%)
  • 10:00 ET: September Consumer Confidence (Briefing.com consensus: 90.0; prior 89.4)
  • 10:00 ET: August JOLTS - Job Openings (Briefing.com consensus: 7.150M; prior 7.271M)
  • 11:00 ET: Fed Governor Bowman (FOMC voter) opening remarks at community bank cyber workshop
  • 12:40 ET: Fed Governor Barr (FOMC voter) speech on economic outlook
  • 13:00 ET: Chicago Fed President Goolsbee (non-FOMC voter)
  • 14:00 ET: New York Fed President Williams (FOMC voter)
  • 15:00 ET: Fed Governor Waller (FOMC voter) speech on payments