US TSYS: Yields Climb to Multi-Decade Highs, Crude Bounces, Trump Welcomes Xi
* Treasuries look to finish broadly weaker but off midday lows after yields climbed to the highest levels in 20 years Wednesday. Higher than expected S&P flash PMIs (carry over from hawkish flash PMIs for EGBs) triggered heavy selling, while doubts over US/Iran diplomatic efforts spurred crude prices higher. * TYZ6 currently -30 at 105-02 vs. 104-28 low, yield +.1466 at 5.1079% vs. 5.1329% high. Tsy futures extended lows after large 3.1bp tail - 16th consecutive for the $70B 5Y note auction (91282CRK9) drew 5.033% high yield vs. 5.032% WI; 2.21x bid-to-cover vs. 2.37x prior (2.33x 5-auction avg). * The S&P Global US PMIs were far stronger than expected in the flash September update, with manufacturing hitting a 52-month high (57.0 (cons 53.7) in Sep prelim after 53.9 in Aug) and services a 59-month high (58.7 (cons 55.8) in Sep prelim after 56.5 in Aug). Input costs also surged higher on the back of higher energy prices, less surprising considering the survey was collected 10-22 Sep, although selling price inflation was more muted and still below those seen through March-July. * Crude oil has risen on Wednesday as earlier optimism around US-Iran diplomatic efforts has faded followi
* Treasuries look to finish broadly weaker but off midday lows after yields climbed to the highest levels in 20 years Wednesday. Higher than expected S&P flash PMIs (carry over from hawkish flash PMIs for EGBs) triggered heavy selling, while doubts over US/Iran diplomatic efforts spurred crude prices higher. * TYZ6 currently -30 at 105-02 vs. 1079% vs.
1329% high. 033% high yield vs. 21x bid-to-cover vs. 33x 5-auction avg).
5 in Aug). Input costs also surged higher on the back of higher energy prices, less surprising considering the survey was collected 10-22 Sep, although selling price inflation was more muted and still below those seen through March-July. 4/bbl. US Secretary of State Marco Rubio said that if there is to be a deal with Iran, it would require hard work and time and that Tuesday talks with Iran were positive but not a breakthrough.
A senior Iranian official told Reuters that Tehran was reviewing a US response to its proposal to end hostilities, although many differences remain between the sides. * Gov Barr (permanent FOMC voter)'s speech Tuesday: is primarily on the longer-term outlook for the housing sector, but importantly he notes that his "base case" is for "further policy adjustments" (plural). "In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion. " * Look ahead to Thursday: After Aussie jobs data, the focus will be on CB decisions in Sweden, Switzerland and Norway.
Meanwhile, headlines emanating from the Trump-Xi summit will garner significant attention after Xi. China bank holiday Thursday.