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Treasuries pushed higher over US morning and held gains to leave yields near lows of the day into Wednesday close. Drivers on the day included a weak ADP report for September that catalyzed a relief rally alongside a slide in oil that also appeared to add support to the bid for US duration. Gains were led by the front-end with 2y yields more than 10bps lower on the day shortly after 3pm ET, while yields along the long-end were richer by around 5bps. 2s10s and 5s30s spread ended steeper by 4.5bps and 3.5bps respectively, with the 10y yield around 4.72%, richer by 7bps vs. yesterday’s close and outperforming core European bonds on the day. Most gains were seen over the US morning following September ADP employment, which missed consensus estimates with an 89k print. The curve re-steepened into the rally that followed to unwind an early flattening move. Flows on the desk were light with nothing significant to note outside some decent real yield demand and better receiving of belly swaps.

In China IG, weak tone but China is outperforming the broader selloff. Market was hit in higher beta names, HRINTH 1-1.5pts lower and VNKRLE -1pts. Other China fins more tame, bonds anywhere 3-5bps wider but the selling is light. Lenovo is marketing a USD200m revolving loan, with proceeds for general corporate purposes, pricing at SOFR+100bps.

In China HY, weak day with both performing and stressed side trading down, weakness in performing space mostly rates related but market finally cracked and recent theme of spread outperformance in Macau is unwinding with spreads underperforming today as well, space is down 0.5-1.5pts. China property also weaker but contained in high cash lines as selling fatigue sets in on more distressed low cash lines, bonds 1-3pts lower. China industrials also weaker with outperformers down 0.5-1.5pts. China SCE announced the non-payment of principal and interest amounting to approximately USD 61m under its syndicated loan agreement, and resulting in an event of default under the company’s offshore USD senior notes, will apply for suspension of trading of offshore USD notes.

In Sovereigns,. INDON/PHIL opened weaker trading 7-12bps wider in terms of spreads. There has been selling on the back of rates moves and most buyers are sidelined waiting for any kind of stability in the macro markets. The big move wider however has come from the street defending some beta shorts and is not surprising that some of the more borrowed bonds in INDON, PHILIP. In Frontiers, SRILAN/MONGOL traded 0.25-0.5pt lower as some supply in SRILAN and some demand in MONGOL in small sizes. In IG, weakness all around with macro sentiment fragile given the massive move in rates. Low beta names are about 2-7bps wider with bid side liquidity thin in the face of better selling and street hits, coming off the wides by 2-3bps after rates pared losses in the afternoon. Massive underperformance in Thai banks with BBLTB curve about 10-15bps wider on the back of market talk of SEC Thai “Regulation changes”. PTTGC continues to be a bright spot with street lifts in across the curve with RM selling the belly into the strength. In HY, finally we are seeing a proper move in non-China HY bonds with level roughly -0.25 to -1pt. Flows skewed to better selling but outflow pressure not there yet. Thai AT1 underperformed with some market talk regarding some regulation changes in secondary trading. AT1 down 1-1.5pts, T2 +15 bps while India AT1 merely -0.25pt. VEDLN more or less unchanged despite headlines.

AT1s closed the day about 0.375pts lower, with the early rates scare setting the tone and the market not in the mood to bounce as treasuries recovered. Early selling from HFs in recent new deals, and from some asset managers in shorter call paper. In terms of z-spread to worst the market was about about 12bps wider. Dealer bids were defensive in the early session, but liquidity improved slightly post lunch.  On the plus side, holders of SOCGEN 7.375s get their redemption cash today (1.25bn USD) so that will help liquidity in terms of technicals. Active names include SOCGEN, BNP, ACAFP, HSBC, BBVASM, BNS, INTNED, TD and UBS.