TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 7 TICKS HIGHER 106-27+

Yields drop as oil prices slide on US/Iran diplomacy hopes. At settlement, 2-year -0.7bps at 4.587%, 3-year -1.4bps at 4.650%, 5-year -2.7bps at 4.700%, 7-year -2.8bps at 4.790%, 10-year -2.7bps at 4.906%, 20-year -2.9bps at 5.312%, 30-year -2.8bps at 5.281%.

THE DAY: Treasuries were bid across the curve on Monday, with the upside supported by a sizeable decline in crude prices. The overall tone between the US and Iran was positive, with hopes of a diplomatic breakthrough following Qatari mediation. Meanwhile, Iran's Supreme Leader reportedly granted the President some authority regarding negotiations with the US.

Lower oil prices helped push yields down across the curve, with the curve flattening as longer-dated yields led the move. Attention now turns to Tuesday's midterm elections, although developments in US/Iran talks will also remain key.

Economic data on Monday saw the ISM Manufacturing PMI beat expectations, while the prices and employment indices both declined, providing some relief on inflation and labour market pressures despite stronger manufacturing activity. However, prices remained elevated, while employment continued to signal expansion. There was little reaction to the data. Meanwhile, the US Treasury released its latest quarterly financing estimates, projecting borrowing of USD 618bln in Q4, below the USD 628bln previously expected, while Q1 borrowing is projected at USD 800bln, assuming an end-March cash balance of USD 1tln. Attention turns to Wednesday's Quarterly Refunding Announcement, particularly any changes to issuance guidance and commentary on buyback operations.

The decline in yields was potentially limited by rate-lock selling amid a busy corporate issuance calendar on Monday, with Oracle (ORCL) entering the market with a USD 10bln debt offering alongside a USD 10bln equity offering. Meanwhile, Meta (META) is reportedly planning a five-part USD-denominated and six-part EUR-denominated bond sale, while Alphabet (GOOGL) also launched a EUR 6bln bond offering.

• US to sell USD 100bln of 6-week bills on November 3rd.
• US sold 3-month bills at high-rate 4.040%, B/C 2.88x; sold 6-month bills at high-rate 4.150%, B/C 2.89x

• Fed Hike Pricing via CME FedWatch: Dec 18.7bps (prev. 17.6bps), Mar 39.7bps (prev. 37.1bps)
• EFFR at 3.88% (prev. 3.88%), volumes at USD 109bln (prev. USD 117bln) on October 30th
• SOFR at 3.95% (prev. 3.94%), volumes at USD 3.175tln (prev. USD 3.145tln) on October 30th
• NY Fed RRP op demand at 5.09bln (prev. 4.38bln) across 6 counterparties (prev. 3) on November 2nd