Bond Market Update

Bumpy Week Continues

• U.S. Treasuries retreated on Thursday, lifting yields on 10s and 30s back above their 50-day moving averages, though intraday action was largely uneventful. Treasuries recorded the bulk of their losses at the open before establishing a sideways range that was in effect for the rest of the morning. Shorter tenors paced a late-morning rebound off lows that briefly lifted action above the day's starting levels, but the entire complex found renewed pressure after the U.S. Treasury completed this week's auction slate with an unimpressive 30-yr bond sale. The weak auction pressured the 30-yr bond to a fresh low, where it remained into the close while shorter tenors finished just above their morning lows. Today's selling dampened December rate cut expectations with the market now essentially projecting a toss-up. Crude oil climbed off a three-week low while the U.S. Dollar Index fell 0.4% to 99.12.
• Yield Check:
  • 2-yr: +2 bps to 3.59%
  • 3-yr: +3 bps to 3.59%
  • 5-yr: +4 bps to 3.70%
  • 10-yr: +5 bps to 4.11%
  • 30-yr: +4 bps to 4.70%

• News:
  • The International Energy Agency raised its supply and demand forecasts for 2025 and 2026.
  • Japan's Prime Minister Takaichi said that the primary balance target could be calculated over several years rather than annually, which would open the door to greater fiscal spending. She repeated that she would like to see higher tax revenues without tax hikes.
  • Germany's economy minister warned that trade dynamics are expected to weaken significantly in 2026.
  • China's October New Loans reached CNY220.0 bln (expected CNY460.0 bln; last CNY1.290 trln) and October Loans grew 6.5% yr/yr (expected 6.6%; last 6.6%). October total social financing reached CNY810.0 bln (expected CNY1.23 trln; last CNY3.53 trln). 
  • Japan's October PPI was up 0.4% m/m (last 0.5%), rising 2.7% yr/yr (expected 2.5%; last 2.8%).
  • Australia's October Employment increased by 42,200 (expected 20,000; last 12,800) and full Employment increased by 55,300 (last 6,500). October Unemployment Rate fell to 4.3% from 4.5% (expected 4.4%) and October Participation Rate remained at 67.0%. October MI Inflation Expectations slowed to 4.5% from 4.8%.
  • New Zealand's October Electronic Card Retail Sales grew 0.2% m/m (last -0.5%), rising 0.8% yr/yr (last 1.0%). September Visitor Arrivals increased 2.9% m/m (last 2.4%).
  • Eurozone's September Industrial Production was up 0.2% m/m (expected 0.7%; last -1.1%), rising 1.2% yr/yr (expected 2.1%; last 1.2%).
  • U.K.'s Q3 GDP expanded 0.1% qtr/qtr (expected 0.2%; last 0.3%), growing 1.3% yr/yr, as expected (last 1.4%).
  • France's Q3 Unemployment Rate rose to 7.7% from 7.6% (expected 7.6%).
  • Swiss October PPI was down -0.3% m/m (expected -0.1%; last -0.2%), falling 1.7% yr/yr (last -1.8%).
• Today's Data:
  • Weekly crude oil inventories increased by 6.41 mln barrels after increasing by 5.20 mln barrels a week ago.
  • $25 bln 30-year Treasury bond auction results (prior 12-auction average):
    • High yield: 4.694% (4.749%).
    • Bid-to-cover: 2.29 (2.40).
    • Indirect bid: 71.0% (62.8%).
    • Direct bid: 14.5% (24.2%).
• Commodities:
  • WTI crude: +0.4% to $58.74/bbl
  • Gold: -0.4% to $4195.00/ozt
  • Copper: -0.2% to $5.10/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1634
  • GBP/USD: +0.4% to 1.3187
  • USD/CNH: -0.2% to 7.0974
  • USD/JPY: -0.2% to 154.50
• The Day Ahead:
  • 8:30 ET: October PPI (Briefing.com consensus 0.4%; prior NA), Core PPI (Briefing.com consensus 0.3%; prior NA), October Retail Sales (Briefing.com consensus 0.3%; prior NA), and Retail Sales ex-auto (Briefing.com consensus 0.3%; prior NA)
  • 10:00 ET: September Business Inventories (Briefing.com consensus 0.1%; prior NA)
  • 10:30 ET: Weekly natural gas inventories (prior +33 bcf)