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Treasury Market Outlook: bonds have sold off sharply.

Treasury Market Outlook: bonds have sold off sharply as stocks spike on reports the U.S. and China have agreed in principle to roll back some tariffs amid progress on the Phase One deal. That optimism as concurrently boosted equities. Treasury rates are 3 to about 6 bps higher, with the 2-year at 1.64% with the 10-year at 1.8779%. Core European rates are over 5 bps higher with the Bund at -0.274% and the Gilt at 0.763%. U.S. equity futures are 0.5% firmer, with European bourses posting gains of 0.7% on the DAX and 0.2% on the FTSE. The good news on trade helped offset a -0.6% decline in German September industrial production, though it reaffirmed the recessionary picture. In Japan, BoJ Governor Kuroda said that the central bank will remain committed to monetary easing to achieve its 2% inflation target, though he admitted "it's taking time." No change is expected from the BoE. The U.S. slate is light with just weekly jobless claims are expected at 215k from 218k previously. September consumer credit is due late in the session. The Treasury auctions $19 B of 30-year bonds. For Fedspeak, there's Kaplan, and Bostic who discusses monetary policy at Money Marketeers in N.Y. after the close. The earnings calendar includes Walt Disney, Air Products, Activision Blizzard, Keurig Dr Pepper, Johnson Controls, Monster Beverage, AmerisourceBergen, Discovery, Cardinal Health, and Symantec.

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Publication:The Fly
Date:Nov 7, 2019
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