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US TSYS: October ADP Jobs Gain Surprise Saps Short End Support

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Treasuries look to finish mostly lower Wednesday, curves flatter with Bonds outperforming after a volatile first half.
  • Treasuries opened higher on the back of strong overnight support in Gilts ahead this morning’s eagerly awaited UK Budget statement. Rates gapped lower following a much better than expected ADP jobs gain for October at 233k (cons 111k) for its strongest monthly print since Jul’23, followed by an upward revised prior to 159k (initial 143k).
  • Treasury futures bounced off post-ADP lows, mirroring a bounce in Bunds and Gilts as markets digested the UK Budget statement. Mixed US data dropped at the same time with stronger than expected Core PCE inflation and Real GDP growth in the Q3 advance report technically below expected at 2.8% annualized. Comments from former Fed VC Brainard that Friday’s employment data will likely be lower due to “disruptive hurricanes, strike activity” contributed to the bounce in intermediate to long end Tsys.
  • The midmorning drive to session highs was short lived, however, support evaporated as details regarding a huge increase in gilt issuance over 5 years spurred heavy selling in EGBs. Meanwhile, pending home sales stronger than expected the best single monthly increase since June 2020 while the Quarterly Refunding Announcement came out in line with estimates at $125B: $58B 3Y notes, $42B 10Y notes and $25B 30Y Bonds.
  • After the bell, the Dec'24 10Y contract is trading -6 at 110-18 vs. 110-17 low, 10Y yield at 4.2823 (+.0282). Curves are flatter: 2s10s -4.377 at 10.998 (-9.646 low), 5s30s -7.240 at 34.296.
  • Focus turns to Thursday’s weekly claims, personal income/spending and MNI’s Chicago PMI data, not to mention Friday's October employment data and next Tuesday's Presidential Election.
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  • Treasuries look to finish mostly lower Wednesday, curves flatter with Bonds outperforming after a volatile first half.
  • Treasuries opened higher on the back of strong overnight support in Gilts ahead this morning’s eagerly awaited UK Budget statement. Rates gapped lower following a much better than expected ADP jobs gain for October at 233k (cons 111k) for its strongest monthly print since Jul’23, followed by an upward revised prior to 159k (initial 143k).
  • Treasury futures bounced off post-ADP lows, mirroring a bounce in Bunds and Gilts as markets digested the UK Budget statement. Mixed US data dropped at the same time with stronger than expected Core PCE inflation and Real GDP growth in the Q3 advance report technically below expected at 2.8% annualized. Comments from former Fed VC Brainard that Friday’s employment data will likely be lower due to “disruptive hurricanes, strike activity” contributed to the bounce in intermediate to long end Tsys.
  • The midmorning drive to session highs was short lived, however, support evaporated as details regarding a huge increase in gilt issuance over 5 years spurred heavy selling in EGBs. Meanwhile, pending home sales stronger than expected the best single monthly increase since June 2020 while the Quarterly Refunding Announcement came out in line with estimates at $125B: $58B 3Y notes, $42B 10Y notes and $25B 30Y Bonds.
  • After the bell, the Dec'24 10Y contract is trading -6 at 110-18 vs. 110-17 low, 10Y yield at 4.2823 (+.0282). Curves are flatter: 2s10s -4.377 at 10.998 (-9.646 low), 5s30s -7.240 at 34.296.
  • Focus turns to Thursday’s weekly claims, personal income/spending and MNI’s Chicago PMI data, not to mention Friday's October employment data and next Tuesday's Presidential Election.