US TSYS: Yields Rise on Shutdown Optimism
Treasuries finished weaker into the close, after trying to stage a comeback mid-way through the US trading day. As optimism increased over a potential US government shutdown end following eight Democrats broke ranks indicating their support, with a vote to come.
The US 10-Yr Treasury Futures had drifted to a low of 112-15+ before selling off to 112-26+ before rallying back to the mid-point of the range at 112-19+. The mid-point of the range is the mid-point between the 50-day EMA and the 100-day EMA. The 10-Yr is set to open at
Cash sold off with yields 1-3.5bps higher across the curve with the long end the best performers. The 10-Yr had trended around 4.12% before a further sell off to 4.1453%. A rally then preceded down below 4.10% before finishing at 4.11%. Whilst the odds of a rate cut in December has eased, the ebb and flow of treasuries overnight was aligned with the news flow on the government shutdown.
- The US 2-Yr is at 3.59% (+3bps)
- The US 5-Yr is at 3.719% (+3.3bps)
- The US 10-Yr is at 4.122% (+2.3bps)
- The US 30-Yr is at 4.711% (+1.1bps)
The bid to cover on both auctions exceeded the prior overnight, indicating strong demand for bills.
With the data calendar empty due to the shutdown and issuance focused on bills, the bond market's focus on shutdown headlines was inevitable and was the main driver overnight, and likely to continue today.
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US: Trump Oval Office Announcement Underway Shortly
US President Donald Trump is shortly due to deliver an announcement in the White House Oval Office. LIVESTREAM The announcement is expected to relate to drug pricing and could follow a similar template to a recent pledge from Pfizer.
- The announcement will be Trump's first press remarks since a market-moving Truth Social statement earlier today in which Trump suggested calling off a meeting with Chinese President Xi Jinping and raising tariffs on China in response to new export controls from Beijing on rare earths. See earlier bullets here and here.
RATINGS: Moody's Completes Periodic Review Of Belgium, No Rating Action
No ratings actions for Belgium from Moody's, which is quoted in a press release on Bloomberg: "Moody's Ratings (Moody's) has completed a periodic review of the ratings of Belgium and other ratings that are associated with this issuer. The review was conducted through a rating committee held on 2 October 2025 in which we reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), and recent developments. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future."
- There had been some speculation there could be a ratings action - MNI wrote Thursday: "* Moody's on Belgium (Current rating Aa3, Outlook Negative): We expect Moody's to maintain their current stance in the absence of 2026 budget details."
MACRO ANALYSIS: US Macro Week Ahead: No CPI, But Plenty Of Pre-Blackout FedSpeak
Below is the week’s data schedule, with MNI’s annotation of whether or not data will be postponed.
- As we went to press, the Fed announced that next week's Industrial Production data will be postponed (was due to be published next Friday Oct 17) as the data “incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown.”
- We won’t be getting September CPI as scheduled on Oct 15, but at least the BLS announced it will publish the data on Oct 24.
- As such next week we’ll be looking at some under-covered data points, including the Redbook weekly and Chicago Fed’s CARTS retail sales data (in lieu of the Census Bureau retail sales report), with a little more focus than usual on regional Fed manufacturing indices (NY, Philadelphia).
- Once again, the dearth of tier-one data leaves Fed commentary in focus ahead of the pre-FOMC blackout period: highlights for us are Philadelphia Fed President Paulson making her first comments on monetary policy on Monday since being appointed in the summer, while as always Chair Powell bears watching on Tuesday (we also hear from Bowman, Waller, Collins, Miran, Schmid, and Musalem).
- Additionally we get the latest Beige Book which was already key given the FOMC was already increasingly focused on anecdotal information as it attempts to navigate murky economic waters.
