Treasury Yields Mixed as Americans Vote in Midterm Elections — Market Talk
0910 ET - Treasury yields are mixed as Americans head to the polls amid high inflation and government spending. The Treasury projects to borrow a hefty $800 billion in 1Q 2027 and investors look to tomorrow's refunding announcement to understand how much of it will come from short-term and long-term debt. Election results will determine how docile Congress will be to the Trump administration's spending plans, potentially affecting bond markets. The JOLTS report at 10 a.m. ET kicks off this week's string of labor data. Oil falls 3%. The 10-year yield is at 4.906%, up from yesterday's 4.893% settlement. The two-year slips to 4.571% from 4.581%. ([email protected]; @ptrevisani)0853 ET - Sentiment among German chemical firms retreated in October, according to a monthly indicator. Business expectations in particular deteriorated significantly, while companies are less positive about their current business, the Ifo Institute says. "Restructuring and site closures in the chemical industry are a cause for concern for the companies," Ifo's Anna Wolf says. Firms plan further job cuts due to restructuring, although they are less negative about their earnings situation than in the first half of the year. "Little has changed with regard to the fundamentally tense competitive situation, both domestically and abroad," Wolf says. ([email protected])0851 ET - The U.S. economy increasingly appears to be moving at two speeds, with vulnerabilities adding up, Insight Investment's Adrian Grey says in a note. AI-related investment remains an important source of strength, but housing, parts of manufacturing and more interest-rate-sensitive areas are facing greater pressure, the global chief investment officer says. "The risk is that these vulnerabilities begin to reinforce one another," he adds. If that happens, the aggregate economic picture could deteriorate more quickly than individual data points currently suggest, particularly if weakness in AI-related markets also starts to undermine household wealth and confidence, according to Insight Investment. ([email protected])0756 ET - The Polish zloty's weakness could have further to go as the currency falls to an almost three-year low against the euro due to political conflict in Poland, Commerzbank's Tatha Ghose says in a note. Riot police were deployed on Friday after Constitutional Tribunal President Bogdan Swieczkowski was suspended amid conflict between the country's nationalist president and the pro-European government. Political conflict is spreading across key institutions just as the fiscal backdrop is deteriorating, Ghose says. "We think that the risk of a sharper zloty move may be mounting." The euro rises 0.1% to 4.4198 zloty after earlier reaching 4.4259, its highest level since mid-November 2023, according to LSEG. ([email protected])0755 ET - The Bank of England is expected to increase interest rates by a quarter-point at Thursday's policy meeting, but the rate rising cycle is unlikely to last for long, Generali Investments' Martin Wolburg says in a note. "We see it as a fine-tuning, not the start of a long tightening cycle." Nonetheless, markets fully price in three more BOE rate rises by September 2027, LSEG data show. ([email protected])0705 ET - Bitcoin's ability to remain above $76,000 in the wake of the record hack at crypto exchange Binance suggests the incident hasn't triggered widespread capitulation, Zaye Capital Markets analyst Naeem Aslam says in a note. "More concerning is the weakening institutional demand." U.S. spot bitcoin exchange traded funds recorded about $643.3 million in net outflows on October 30, he says. Meanwhile, President Trump's comments about the importance of bitcoin to the U.S. financial system are positive but Tuesday's midterms introduce uncertainty over future crypto legislation and regulation, he says. Bitcoin rises 0.4% to $76,986 after reaching a six-week low of $76,197 Friday, LSEG data show. ([email protected])0650 ET - The Bank of England is likely to raise interest rates in a 7-2 vote on Thursday but sound cautious about future tightening, limiting any gains in sterling, Monex Europe analysts say in a note. The BOE could signal a pause in lifting rates in December, they say. Ahead of the decision there is little on the U.K. calendar, leaving sterling to take its cue from oil prices and the Middle East, they say. Any renewed fall in energy prices would "ease the inflation argument for further BOE hikes." Sterling trades flat at $1.3407 and Monex expects it to remain around this level before the decision but drift toward $1.33 thereafter. The euro falls 0.1% to 0.8335 pounds. ([email protected])0647 ET - Qatar's consumer prices rose 0.52% in August from the previous month, driven partly by higher recreation and cultural expenses, according to the National Planning Council. Prices for recreation, sport and culture increased 7.06% on month, the largest gain among expenditure categories. Personal-care and miscellaneous services prices rose 0.85%, while restaurant and accommodation costs increased 0.47%. Transport prices declined 0.53% and clothing and footwear costs fell 2.26%, partially offsetting increases elsewhere. The figures reflect monthly changes under the council's updated consumer-price index methodology. ([email protected])0640 ET - Qatar's industrial producer price index fell 2.77% in August from the previous month, weighed down by lower crude oil and natural-gas prices, according to the National Planning Council. Mining and quarrying producer prices declined 4.02%, including a 4.03% drop in crude petroleum and natural gas, while manufacturing prices rose 2.4%. Refined petroleum product prices jumped 14.3%, highlighting the divergence between energy extraction and downstream manufacturing. Mining and quarrying account for more than 82% of the overall index, making movements in that sector the main driver of the headline decline. ([email protected])0638 ET - The cost of protecting Brazil's sovereign debt against default rises to the highest level in more than one year due to fiscal concerns following last month's presidential election victory by Luiz Inacio Lula da Silva. The victory ends prospects of fiscal prudence in the country, BCA Research's Max Malakhveitchouk and Arthur Budaghyan say in a note. "Lula's fourth term will resemble his third: priority on social programs, workers' empowerment, welfare, and affordability." Brazil's five-year credit default swaps climb to 148 basis points, the highest since October 2025, S&P Global Market Intelligence data show. ([email protected])0555 ET - The dollar turns higher as Treasury yields rise and oil prices rebound after sharp falls in the previous session. The U.S. struck Iran's Qeshm Island in the Strait of Hormuz on Monday, the WSJ reported, citing U.S. officials. The WSJ reported separately that America's Gulf allies are preparing for the possibility of a broader U.S. military campaign against Iran. Brent crude rises 1.1% to $105.89 per barrel after reaching a three-week low of $103.28 Monday, LSEG data show. Higher oil prices support the dollar as the U.S. is a net oil exporter. The DXY dollar index rises 0.1% to 101.816 after hitting a one-month low of 101.426 Monday but gains are limited amid investor caution ahead of Tuesday's midterm elections. ([email protected])0551 ET - Gulf sovereign and bank bonds face selling pressure despite renewed expectations of diplomatic engagement between the U.S. and Iran, according to MUFG. The bank's credit-trading desk says exchange-traded funds and institutional investors were predominantly sellers Monday, with demand for longer-dated securities weakening. Spreads on Qatar's 2049 and 2050 sovereign bonds widen eight basis points, while Abu Dhabi sovereign spreads increase two to four basis points. Saudi government bond spreads remain broadly unchanged, outperforming regional peers. ([email protected])