Reply To: Bond Traders Weekly Outlook: Basis Trades, Derivative Hedging, and Levered Speculation


Early Bonds:

U.S. Treasuries lower start with issues in the belly expected to show relative weakness in the early going.
The Bank of Japan conducted another unscheduled buying operation, offering to purchase JGBs with maturities between 5- and 10-yrs and 10- to 25-yrs.

In economic data, Australia’s Manufacturing PMI contracted for the eighth month in a row, hitting its lowest level in six months, in the flash reading for October, while Services PMI dipped into contractionary territory. The situation in Europe was not much better as flash Manufacturing and Services PMI readings from France, Germany, and the U.K. remained in contractionary territory.

The U.S. session will also feature the release of flash Manufacturing and Services PMI readings for October and the U.S. Treasury will sell $51 bln in 2-yr notes at 13:00 ET.

Crude oil remains near its 50-day moving average (86.15) while the U.S. Dollar Index is up 0.3% at 105.83.

2-yr: +2 bps to 5.08%
3-yr: +1 bp to 4.89%
5-yr: +2 bps to 4.81%
10-yr: +2 bps to 4.86%
30-yr: +1 bp to 5.00%