Across the Curve

Bond Yields Are Collapsing Around The World

Kuroda's decision to go full NIRP-tard is benefitting investors worldwide... in bonds. JGB yields hit record lows, 5Y Bunds are trading below the -30bps ECB deposit rate, and US Treasury yields are collapsing across the curve with 10Y below August's Black Monday lows back to 9 months lows...

Futures Extend Slide; Europe Has Biggest Weekly Drop In 2 Months; Commodities At 16 Year Lows

For once, the overnight session was not dominated by weak Chinese economic data (which probably explains why the Shanghai Composite dropped for the second day in a row, declining 1.4%, and ending an impressive run since the beginning of November) and instead Europe took the spotlight with its own poor data in the form of Q3 GDP which printed below expectations at 0.3% Q/Q, down also from the 0.4% increase in Q2, with several key economies rolling over including Germany, Italy, and Spain while Europe's poster child of "successful austerity" saw Q3 GDP stagnate, far worse than the 0.5% growth consensus expected.

Strong 30 Year Auction Sees Second Highest Ever Allotment To Foreign Central Banks

The internals were mixed with the Bid to Cover sliding from 2.460 to 2.409, which however was above the 12 TTM average of 2.356. Offsetting the slightly weaker BtC print was the jump in Indirects, which rose from 56.4% to 60.3% the second highest on record, as foreign central bankers have again decided that the safety of US paper offsets the duration risk of holding it in a rate hike environment.

Strong 10 Year Auction Breaks Treasury Gloom As Foreign Central Banks Come Rushing In

Following yesterday's abysmal 3 Year auction, many rates investors were on edge ahead of today's 10 Year auction in the aftermath of the weakness across the curve seen since the "stellar" jobs report which had dragged yields higher across the curve. It turned out fears were premature, and moments ago the $24 billion reopening of 10 Years priced at a yield of 2.304%, which while highest since June, priced 0.8bps through the When Issued showing surprising demand for paper.

Bond Blood-Bath Continues - 5Y Yield Nears Key Technical Resistance

The carnage in Treasuries continues as this morning's chatter from 'sources' about moar NIRP in Europe has seemingly sparked a sudden exodus from US bonds (even with stocks lower). Across the curve yields are up 4-5bps very suddenly - all testing (if not already broken) 2015 highs. Perhaps most critically for now is the 5Y yield which is surging towards 1.80% - a crucial level of resistance over the past few years.

Russia Refuses To Participate In Ukraine Debt Restructuring

War-torn Ukraine has reportedly reached a restructuring deal with a group of creditors headed by Franklin Templeton, according to the country’s finance minister Natalie Jaresko. The terms of the agreement call for a 20% writedown and a reprofiling that includes a maturity extension of four years and an across-the-board 7.75% coupon. Vladimir Putin isn't interested.

With All Eyes On Payrolls US Futures Tread Water; China Rises As Copper Crashes To New 6 Year Low

Here comes today's main event, the July non-farm payrolls - once again the "most important ever" as the number will cement whether the Fed hikes this year or punts once again to the next year, and which consensus expects to print +225K although the whisper range is very wide: based on this week's ADP report, NFP may easily slide under 200K, while if using the non-mfg PMI as an indicator, a 300K+ print is in the cards. At the end of the day, it will be all in the hands of the BLS' Arima X 12 seasonal adjusters, and whatever goalseeked print the labor department has been strongly urged is the right one.