Bond Market Update

Midweek Losses Recovered

• U.S. Treasuries rallied on Thursday, recovering their losses from Wednesday with ease. The trading day started with solid gains in most tenors after a night that was highlighted by the release of the latest policy Statement from the Bank of England. The central bank left its bank rate at 4.00%, but four out of nine policymakers voted for a cut, so there is a sense that a cut could be announced as soon as December. Treasuries followed their higher start with an early extension of their gains, returning to their closing levels from Tuesday in mid-morning action. The advance took place alongside a weak showing from equities and a report from Challenger, Gray & Christmas that showed 153,000 job cuts in October, representing the highest total for any October since 2003. The Challenger report usually does not elicit a response from the market, but it garnered additional interest given the ongoing delay to economic data reporting from the government. Treasuries reached their best levels just before noon, remaining just below their highs into the close. Crude oil recorded a modest loss while the U.S. Dollar Index fell 0.5% to 99.71.
• Yield Check:
  • 2-yr: -6 bps to 3.57%
  • 3-yr: -7 bps to 3.58%
  • 5-yr: -8 bps to 3.69%
  • 10-yr: -6 bps to 4.09%
  • 30-yr: -5 bps to 4.69%

• News:
  • The Atlanta Fed's GDPNow forecast for Q4 GDP was left at 4.0% in the latest update.
  • Japan's Prime Minister Takaichi will reportedly seek a JPY10 trln extra budget, about 40% lower than what had been expected.
  • Japan's federation of Textile, Chemical, Commerce, Food, and General Services workers will seek a 6% wage hike in the spring.
  • China has reportedly purchased 120 kt of U.S. wheat for December delivery.
  • China's Ministry of Finance priced $4 bln in dollar-denominated debt.
  • Germany's Bundesbank released its latest financial stability report, expressing concern over significantly elevated equity and bond valuations.
  • Japan's October Services PMI hit 53.1 (expected 52.4; last 53.3). September overall wage income was up 1.9% yr/yr, as expected (last 1.3%).
  • South Korea's September Current Account surplus reached $13.47 bln (last surplus of $9.15 bln).
  • India's October Services PMI hit 54.9 (expected 58.8; last 60.9).
  • Australia's September trade surplus reached AUD3.938 bln (expected surplus of AUD3.93 bln; last surplus of AUD1.11 bln) as imports rose 1.1% m/m (last 3.3%) and exports increased 7.9% m/m (last -8.7%).
  • Eurozone's September Retail Sales dipped 0.1% m/m (expected 0.2%; last -0.1%) but were up 1.0% yr/yr, as expected (last 1.6%).
  • Germany's September Industrial Production rose 1.3% m/m (expected 3.0%; last -3.7%) but was down 1.0% yr/yr (last -3.7%).
  • France's Q3 nonfarm payrolls fell 0.3% qtr/qtr (expected -0.1%; last 0.2%).
  • Spain's Industrial Production rose 1.7% yr/yr (last 3.3%).
  • Swiss October Unemployment Rate remained at 3.0%, as expected.
• Today's Data:
  • Weekly natural gas inventories increased by 33 bcf after increasing by 74 bcf a week ago.
• Commodities:
  • WTI crude: -0.3% to $59.44/bbl
  • Gold: -0.1% to $3991.10/ozt
  • Copper: -0.2% to $4.97/lb
• Currencies:
  • EUR/USD: +0.5% to 1.1545
  • GBP/USD: +0.7% to 1.3135
  • USD/CNH: -0.1% to 7.1214
  • USD/JPY: -0.6% to 153.13
• The Day Ahead:
  • 8:30 ET: October Nonfarm Payrolls (DELAYED; prior NA), Nonfarm Private Payrolls (DELAYED; prior NA), Unemployment Rate (DELAYED; prior NA), Average Hourly Earnings (DELAYED; prior NA), and Average Workweek (DELAYED; prior NA)
  • 10:00 ET: Preliminary November University of Michigan Consumer Sentiment (Briefing.com consensus 54.0; prior 53.6)
  • 15:00 ET: September Consumer Credit (DELAYED; Briefing.com consensus $8.0 bln; prior NA)