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US TSYS: Off Data Driven Lows, Still Not Far From Late July Lows

US TSYS
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  • Treasuries looked to finish higher Thursday, taking cues from EGB flash PMI data overnight. German composite PMI remained in contractionary territory for the fourth consecutive month while French flash October PMIs were weaker than expected for the second consecutive month.
  • Early Treasury support evaporated after US Data: Initial jobless claims were notably lower than expected for a second week running, at 227k (sa, cons 242k) in the week to Oct 19 after a marginally upward revised 242k (initial 241k) held onto much of last week’s surprise lower. New home sales were stronger than expected as they increased to an annualized 738k in September (cons 720k) from a downward revised 709k (initial 716k).
  • Meanwhile, October flash PMIs fared better than expected across the main sectors as both manufacturing and services indexes increased. The S&P Global press release notes the survey signaling “a further solid rise in business activity to mark a robust start to the fourth quarter”.
  • The morning reversal (TYZ4 fell to a session low of 111-03) was short lived, however, the 10Y contract climbing to 111-13.5 by late morning before settling around 111-08.5 (+7.5). Curves bull flattened: 2s10s -3.374 at 12.968, 5s30s -1.861 at 44.115. There were no obvious headline or flow related drivers for the bounce as Treasuries hold near late July levels.
  • Look ahead: Friday focus on Durables/Capital Goods and University of Michigan's sentiment/inflation outlook. Next week Friday see's the latest round of employment data for October.
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  • Treasuries looked to finish higher Thursday, taking cues from EGB flash PMI data overnight. German composite PMI remained in contractionary territory for the fourth consecutive month while French flash October PMIs were weaker than expected for the second consecutive month.
  • Early Treasury support evaporated after US Data: Initial jobless claims were notably lower than expected for a second week running, at 227k (sa, cons 242k) in the week to Oct 19 after a marginally upward revised 242k (initial 241k) held onto much of last week’s surprise lower. New home sales were stronger than expected as they increased to an annualized 738k in September (cons 720k) from a downward revised 709k (initial 716k).
  • Meanwhile, October flash PMIs fared better than expected across the main sectors as both manufacturing and services indexes increased. The S&P Global press release notes the survey signaling “a further solid rise in business activity to mark a robust start to the fourth quarter”.
  • The morning reversal (TYZ4 fell to a session low of 111-03) was short lived, however, the 10Y contract climbing to 111-13.5 by late morning before settling around 111-08.5 (+7.5). Curves bull flattened: 2s10s -3.374 at 12.968, 5s30s -1.861 at 44.115. There were no obvious headline or flow related drivers for the bounce as Treasuries hold near late July levels.
  • Look ahead: Friday focus on Durables/Capital Goods and University of Michigan's sentiment/inflation outlook. Next week Friday see's the latest round of employment data for October.