The long end of the yield curve continued to weaken early in the overnight session but have since corrected back to yesterday's yield lows/price highs. A similar story can be told in the stock market. Equity futures are off yesterday's lows and looking to retest the highs of the recent rally.

The 5-year note is +5/32 at 99-26+ yielding 1.284% (-3.3%). The 10-year Treasury note is +13/32 yielding 2.68% (-4.9bps).   The 2s/10s curve is 2bps flatter at 229bps wide.  The modest bull flattener is helping "rate sheet influential" MBS prices rise from recent lows. The December FNCL 3.5 is +8/32 at 99-31. The December FNCL 4.0 is +5/32 at 102-16.

S&P 500 futures are up4.50 points to 1,183.25 and Dow futures are trading 28 points higher at 11,100. 

Light crude oil is 0.18% higher at $82.09 per barrel and gold prices are trading 0.60% lower at $1,332.36 per ounce.

Key Events Today:

8:30 ― Initial Jobless Claims have so far averaged 459k each week in October, higher than the 458k average in September or the 487k in August. Economists generally believe weekly claims must come in below 450k consistently to indicate national job growth, so these numbers aren’t quite inspiring.

“Initial jobless claims have been stuck in a tight range of 445-475,000 almost all year,” commented economists at Nomura. “Claims need to break out of these levels to signal any change in labor market conditions. In our view, further declines are more likely than increases.”

Treasury Auctions

  • 1:00 ― $29 billion 7-Year Notes

OTHER EVENTS

  • 10:15 Fed outright Treasury coupon purchase (04/15/12 - 03/31/13) (e: $1.63 bln)
  • 11:00 Kansas City Fed Manufacturing Index (prev 14)

 ISSUANCE

  • FNMA auctions 3-year reference notes; size TBD, inquiries over $7 bln
  • FNMA reopens 1.625% notes maturing October 2015 (additional $1 bln)
  • FNMA, benchmark 3-year, $1 bln tap of 1.625% Oct 2015s; CS/GS/JPM
  • Telefonica, benchmark 5-year expected; BBVA/Citi/DB
  • Korea National Oil, USD deal expected; Barc/BNPP/CS/DB/KDB
  • Sinochem, benchmark 2-part 10s/30s; Citi/HSBC/UBS
  • Lukoil, benchmark 10-year; Barc/ING/RBS
  • CODELCO, issuance expected following roadshow; DB/HSBC