Today’s Market Update:

Treasuries Gain Most Since May Amid Stocks Slump, Italy Concern

  • Ten-year U.S. obligation outperforms German counterpart
  • Move comes as equities sell-off spreads around the world

By Katherine Greifeld

(Bloomberg) —

Treasuries are proving to be the bond-market haven of choice amid the tumult in global equities, rallying the most in more than four months and outstripping gains in German securities.

The yield on 10-year Treasuries fell seven basis points to 3.12 percent, weighed down as U.S. equities futures slumped following steep declines in stock markets from Asia to Europe.

Concern about the budget situation in Italy added fuel to the bid for safety, with U.S. yields extending their slide amid news that the European Union asked the government in Rome to resubmit its budget. U.S. earnings reports Tuesday also darkened the mood, with economic bellwether Caterpillar Inc. flaggingconcern over rising materials costs while 3M Co. cut its forecast.

“There’s plenty of stuff to keep people up at night in terms of what’s going on in Europe, and the global stock markets have not done very well,” said Brian Edmonds, head of interest-rate trading at Cantor Fitzgerald in New York. “That’s an environment where you catch a bit of a bid in Treasuries.”

The 10-year Treasury yield is on course for its biggest one-day slide since May 29. The equivalent German rate was down around 3 basis points at 0.42 percent.

The Treasuries rally comes before the government kicks off this week’s note auctions, with the U.S. set to sell two-, five-, and seven-year notes in the coming days.

Treasury Yields

Term  Current  Last Month
3 Month2.320%2.163%
6 Month2.458%2.369%
2 Year2.858%2.800%
5 Year2.974%2.948%
10 Year3.122%3.063%
30 Year3.323%3.200%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME5.25%
DJIA24,881.98
Crude Oil$67.86
YEN112.02
Gold$1,236.52
1 Year CMT2.64%
1 Month LIBOR2.28%
Fed Funds Effective2.17%
Next FOMC MeetingNovember 7-8
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurveyActualPriorRevised
10/22/2018
Chicago Fed Nat Activity Inde Sep 0.210.170.180.27
10/23/2018Richmond Fed Manufacturing Inde Oct 241529
10/24/2018MBA Mortgage Applications Oct 19-7.1%
FHFA House Price Index MoMAug 0.3%0.2%
Markit US Manufacturing PMI Oct 55.355.6
Markit US Services PMI Oct 54.053.5
Markit US Composite PMIOct 53.9
New Home Sales Sep 625k629k
New Home Sales MoMSep78.2%78.1%78.1%
US Federal Reserve Releases Beige Book
10/25/2018Advance Goods Trade Balance Sep -$75.1b-$75.8b-$75.5b
Wholesale Inventories MoM Sep0.5%1.0%
Retail Inventories MoMSep0.7%0.7%
Durable Goods Orders Sep-1.5%4.4%
Durable Ex Transportation Sep 0.4%0.0%
Cap Goods Orders Nondef Ex ASep 0.5%-0.9%
Cap Goods Ship Nondef Ex Air Sep 0.4%-0.2%
Intial Jobless Claims Oct 20213k210k
Continuing Claims Oct 131652k1640k
Pending Home Sales MoMSep0.0%-1.8%
Pending Home Sales NSA YoYSep -1.9%-2.5%
Kansas City Fed Manf. Activity Oct 1413
10/26/2018GDP Annualized QoQ 3Q3.4%4.2%
Personal Consumption 3Q3.3%3.8%
GDP Price Index 3Q2.1%3.0%
Core PCE QoQ 3Q1.7%2.1%
U of Mich Sentiment Oct 99.099.0
U of Mich Current Conditions Oct 114.4
U of Mich Expectations Oct 89.1
U of Mich 1 Yr InflationOct 2.8%
U of Mich 5-10 Yr InflationOct2.3%
10/29/2018Personal Income Sep 0.4%0.3%
Personal Spending Sep 0.4%0.3%
Real Personal Spending Sep 0.2%
PCE Deflator MoMSep 0.1%0.1%
PCE Deflator YoYSep 2.2%
PCE Core MoMSep 0.1%0.0%
PCE Core YoY Sep 2.0%2.0%
Source: Bloomberg