COLOMBIA: Petro Administration Seeking Constitutional Changes

CIBC note that “modified durations will remain basically unchanged across the FTSE Canada Universe Bond Index (-0.004yrs), short (-0.004yrs), mid (-0.003yrs) and long (-0.001yrs) segments on October 1 with no bonds rolling out of the Universe index and SunLife Oct 1/30 (C$716mm) being the only bond moving from Mid to Short that day. Coupon payments totalling approximately C$407mm between September 30th and October 1st will have minimal impact to the duration change in the Universe Index”.

The September Philadelphia Fed Nonmanufacturing Business Outlook Survey showed a modest pickup in regional services sector activity, albeit remaining soft overall with a weaker outlook.

• The regional level general activity index picked up to -12.3 from -17.5, however the firm-level reading pulled back significantly to 5.8 from 24.6 prior which had been a 41-month high (and now looks like an extreme outlier). The 6-month activity outlooks for both regional and firm-level activity reversed August's rise, falling to 4-month lows in the case of the regional reading.
• New orders dropped to 0.5 from 21.5 (3-month low), with employment mixed (full-time jumped to 9.4 from -3.8 for a 4-month high, but part-time dropped to -7.3 from -2.8 for a 4-month low.
• There was some modest relief on the prices paid front, which dropped to 38.8 from 43.2 - but the former was the 2nd-highest reading since early 2023, and pressures remain elevated overall. Prices received ticked up to the highest level of the year at 21.8 from 20.1, however, potentially suggesting firms are passing on prices to clients, and thereby reducing input-related margin pressures.
• The Philly surveys have been a little erratic the last few months and often outliers to regional peers, and appear to be so again on activity (NY Fed fell back sharply even as Philly improved) but overall these line up with the NY Fed's services survey in prices paid moderating slightly with prices received ticking up. 

Gilt futures respect initial resistance at the 20-day EMA (91.11) on the first test, as bulls shake off the impact of this morning’s poorly received 30-Year supply.

• A break of that resistance level would switch upside focus to the September 11 high (91.82)
• Yields last 3-5bp lower, curves flatter, with 2s10s and 5s30s still unable to retest last week’s pullback lows.
• This morning’s comments from BoE chief economist Pill didn’t really add much new to the monetary policy debate, as he outlined his thoughts on QT and the overall economic outlook.
• Accordingly, GBP STIRs looked through the headlines, taking cues from further out the curve for much of the session.
• SONIA futures last flat to +2.0.
• BoE-dated OIS little changed to 3bp more dovish on the day, showing 6bp of cuts through year-end and not fully discounting the next rate cut until the end of the April MPC meeting.
• Market still trades at the hawkish end of the recent range and we think underappreciates the odds of a cut through year-end.
• Looking ahead, Brightmine wage data will cross overnight (00:01 London).
• Elsewhere, The DMO will come to market with GBP4.75bln of the 4.375% 2030 gilt tomorrow morning.
• Finally, BoE’s Greene will speak late on Wednesday, covering supply-side shocks and monetary policy (17:30 London).