Today’s Market Update:

Treasuries Supported as Gilts Rally on U.K. Cabinet Resignations

By Edward Bolingbroke

(Bloomberg) —

Treasuries higher, off session highs reached during London morning amid steeper rally in gilts sparked by U.K. cabinet resignations over the Brexit withdrawal agreement; also, BOE rate hike expectations were pushed back.

  • U.S. yields lower by 2bp-2.5bp across the curve led by belly, steepening 5s30s by 0.7bp to ~41.5bp; spread is widen by more than 9bp on the week
  • Gilts outperform Treasuries by ~8bp in 10-year sector, with most of the move following resignation of Brexit minister Dominic Raab
    • Short sterling strip bull flattens with September 2020 gaining as much as 14 ticks
    • Eurodollar strip also extends rally with reds (Dec19-Sep20) to blues (Dec21-Sep22) higher by 1.5bp-2bp as Fed hike premium continues to fade
  • IG credit issuance slate includes NWB $1b 3-year and CAF 5-year; new issues have struggled recently, including Wednesday’s $12b DowDuPont offering, which failed to tighten much from IPTs
  • 3-month dollar Libor +1.10bp at 2.64000%; front-end flows were muted following the fix
  • U.S. economic data calendar includes November Empire manufacturing, Philly Fed business outlook, October retail sales and initial jobless claims (8:30am) and September business inventories (10am)
  • Fed speakers include Quarles (10am), Powell (11:30am), Bostic (1pm) and Kashkari (3pm)

To contact the reporter on this story:
Edward Bolingbroke in New York at ebolingbrok1@bloomberg.net

Treasury Yields

Term  Current  Last Month
3 Month2.350%2.297%
6 Month2.499%2.458%
2 Year2.812%2.866%
5 Year2.895%3.024%
10 Year3.088%3.163%
30 Year3.356%3.334%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME5.25%
DJIA25295.60
Crude Oil$57.20
YEN112.73
Gold$1,222.10
1 Year CMT2.67%
1 Month LIBOR2.31%
Fed Funds Effective2.18%
Next FOMC MeetingDecember 18-19
Source: Bloomberg

Economic Indicator Calendar

11/13/2018NFIB Small Business Optimis Oct 108.0107.4107.9 
Monthly Budget Statement Oct -$100.0b-$63.2b
11/14MBA Mortgage Applications Nov 9 -3.2%-0.7%
CPI MoM Oct 0.3%0.3%0.1%
CPI Ex Food and Energy MoMOct 0.2%0.2%0.1%
CPI YoYOct 2.5%2.5%2.3%
CPI Ex Food and Energy YoY Oct 2.2%2.1%2.2%
CPI Index NSA Oct 252.800252.885252.439
CPI Core Index SA Oct 258.922258.939258.441
Real Avg Weekly Earning YoY Oct0.9%1.1%0.8%
Real Avg Weekly Earnings Weekly MoM Oct 0.9%0.5%
11/15Empire Manufacturing Nov 20.023.321.1
Philadelphia Fed Business Out Nov20.012.922.2
Retail Sales Advance MoM Nov0.5%0.8%0.1%-0.1%
Retail Sales Ex Auto MoMOct0.5%0.7%-0.1%
Retail Sales Ex Auto and Gas Oct 0.4%0.3%0.0%
Retail Sales Control Group Oct0.4%0.3%0.5%
Import Price Index MoMOct0.1%0.5%0.5%
Import Price Index ex Petrol Oct0.0%0.2%0.0%
Import Price Index YoY Oct3.3%3.5%3.5%
Export Price Index MoMOct 0.1%0.4%0.0%
Export Price Index YoYOct 3.1%2.7%
Initial Jobless Claims Nov 10213k216k214k
Continuing Claims Nov 31625k1676k1201k
Bloomberg Consumer Comfort Nov 1160.561.3
Business InventoriesSep 0.3%0.3%0.5%
11/16Industrial Production MoMOct 0.2%0.1%0.3%0.2%
Capacity Utilization Oct 78.2%78.4%78.1%78.5%
Manufacturing (SIC) ProductionOct 0.2%0.3%0.2%0.3%
Kansas City Fed Manf. Activity Nov 118
Total Net TIC Flows Sep $108.2b
Net Long-Term TIC Flows Sep $131.8b
11/19NAHB Housing Market Index Nov 6868
11/20Housing Starts Oct 1225k1201k
Housing Starts MoMOct 1.6%-5.3%
Building Permits Oct 1260k1241k1270k
Building Permits MoMOct -0.8%-0.6%1.7%
Source: Bloomberg