U.S. Treasury Expects to Borrow $618B This Quarter — Market Talk

1545 ET - The U.S. Treasury expects to borrow $618 billion in privately held net marketable debt in the current quarter, $10 billion less than announced in August. The reduction is "primarily due to the higher-than-assumed beginning of quarter cash balance, partially offset by lower projected net cash flows," the department says in a statement. For the January-March 2027 quarter, the borrowing estimate is $800 billion, assuming an end-of-March cash balance of $1 trillion. The new borrowing estimate compares with $742 billion borrowed in the July-September quarter, which ended with a cash balance of $984 billion. The Treasury will detail its quarterly refunding plans on Wednesday. ([email protected]; @ptrevisani)1146 ET - The $6.3 billion Binance hack will probably push crypto custodians and exchanges to implement new defenses, including the separation of everyday employee devices from critical financial systems, StoneX analyst Mark Palmer says in a research note. Those firms will also want to create approval policies that bar laptop or vendor logins from reaching the mandating of independent approvals before large transfers, he says. The analyst also expects to see dynamic hourly caps on what any one wallet or service can move. It seems Binance didn't have had any of those measures in place in a form that could have prevented the intrusion, Palmer says. ([email protected])1113 ET - Kuwait accounts for the Gulf's major sovereign bond issuances in October, raising about $3.7 billion through three transactions, according to Kamco Invest's monthly fixed-income report. The country issues $2.25 billion in three-year international bonds carrying a 5.62% coupon and $1 billion in 10-year bonds with a 6.2% coupon, both dated October 26. A further $482 million government bond issue follows on October 28, carrying a 4.13% coupon. Total GCC government bond issuance rises to around $3.7 billion during the month, from $3.3 billion in September, the report shows. ([email protected])1112 ET - Gulf credit spreads widen in October even as regional bonds recover some of their losses, according to Kamco Invest. The option-adjusted spread on GCC dollar-denominated credit rises 20 basis points during the month to 108 basis points, bringing the increase since the start of 2026 to 33 basis points. Emerging-market dollar bond spreads widen by 27 basis points to 197 basis points. Meanwhile, the GCC credit and high-yield dollar bond index gains 1.2% in October but remains down 2.2% for the year. The figures suggest that falling benchmark yields supported bond returns despite a higher premium for credit risk. ([email protected])1111 ET - The Swedish krona is likely to strengthen if the Riksbank raises interest rates on Wednesday, Societe Generale's Kit Juckes says in a note. "With consensus GDP growth forecasts for 2026 at 2.6%, Sweden has Europe's strongest economy at the moment, and the currency is only held back by the Riksbank," he says. That means a rate rise should lift the krona even though a move is highly anticipated, he says. The market prices a 85% chance of a 25 basis-point rate increase, LSEG data show. The euro falls 0.1% to 10.9302 krona after earlier reaching a near three-month low of 10.9210. ([email protected])1107 ET - Conventional bonds across the Middle East and North Africa outperform Islamic debt in October, according to Kamco Invest's monthly fixed-income report. The MENA bond index gains 1.7% during the month, compared with a 1% increase for the region's sukuk index, while the combined benchmark advances 1.5%. Both markets remain in negative territory for 2026, with conventional bonds down 2.6% and sukuk declining 0.5% since the start of the year. Globally, investment-grade debt rises 1.4% in October, while high-yield bonds edge down 0.2%, reflecting differing performances across fixed-income segments. ([email protected])1106 ET - Markets might be overreacting to concerns over France's debt situation, the country's central-bank governor says. "We'll probably have a budget, and stock markets are probably overreacting in terms of the political situation in France," Emmanuel Moulin said in a panel discussion at the World in Progress forum in Barcelona. Bond yields have risen since September primarily due to political uncertainty, said Moulin, who also is a voting member of the European Central Bank. However, France can still pass a 2027 budget without the sign-off from parliament. France's budget situation remains a cause for concern, and whoever runs for next year's presidential election should show they are committed to deficit reduction that is fundamental to reducing debt, he added. ([email protected])1105 ET - Issuance of new U.S. dollar corporate bonds is expected to rise to around $180 billion to $190 billion in November, TD Securities' Hans Mikkelsen says in a note. New credit issuance is likely to be driven by AI-linked supply and mergers and acquisitions, he says. New U.S. dollar IG supply declined in October to $127 billion, from $196 billion in September, Mikkelsen says. The average duration on new IG bonds was shorter in October due to high interest rates, with just 7.7% of deals coming longer than 10 years, he says. "Expect something similar in November." ([email protected])1049 ET - The rise in the October ISM manufacturing survey was partly due to the ongoing AI buildout, according to a note from Capital Economics, while the prices paid index ticked down slightly. "The drop back in the prices paid index was a surprise considering the further leg up in oil prices last month," analysts say. However, that is hardly a reprieve for the FOMC, as the index remains consistent with headline inflation staying close to 4% around the turn of the year. "This will hardly reassure the Fed that inflation pressures are easing," the note says. ([email protected])1025 ET - Yields on U.K. government bonds extend earlier falls, taking the 10-year yield to its lowest in six weeks and the 30-year yield to its lowest in nearly three months, as falling oil prices ease inflation fears and diminish rate-hike prospects. The price of Brent crude drops 6.6% to $105.93 a barrel as ongoing Iranian peace talks increase prospects of de-escalation in the U.S.-Iran conflict. Falling oil prices could encourage Bank of England policymakers to push back against market pricing of several future rate hikes, even as they are expected to raise rates on Thursday. Ten-year gilt yields drop around 9 basis points to a low of 5.192% on, while 30-year gilt yields hit a low of 5.626%, LSEG data show. ([email protected])1009 ET - The Bank of England is likely to resist market pricing of four rate rises over the coming year at Thursday's policy meeting, Bank of America strategists say in a note. The BOE is nonetheless expected to raise interest rates to 4% as a risk management move given rising U.K. inflation, they say. "We expect the monetary policy committee to temper the market's enthusiasm for an aggressive hiking trajectory, which would likely be seen ex-poste as a gentle appeal for calm." Ten-year gilt yields fall to last trade at 5.192%, a six-week low, LSEG data show. ([email protected])0957 ET - The U.S. dollar could weaken if Democrats secure both houses of Congress in Tuesday's midterm elections as there is a high risk they will tighten AI regulation, FxPro's Alex Kuptsikevich says in a note. An AI clampdown would "provide yet another argument in favor of a sell-off in tech shares and will deal a blow to American exceptionalism and the dollar." A Republican defeat would, meanwhile, allow President Trump to shift his focus from domestic to foreign policy, where he has greater scope to operate, with investors fearing fresh uncertainty over issues including the Iran war and renewed trade wars, he says. The DXY dollar index falls 0.3% to 101.567 after earlier reaching a one-month low of 101.426. ([email protected])