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Treasuries Rally On Growth Fears

US TSYS
  • Cash Tsys see a belly-led rally as China lockdown fears come to the fore with the announcement of mass testing to begin in Beijing’s largest district as cases spread.
  • With an aggressive path of Fed tightening already priced in, the market has put more weight on the demand hit rather than the inflationary pressure from further supply side disruption from more widespread lockdowns.
  • 2YY -7.5bps at 2.592%, 5YY -9.1bps at 2.840%, 10YY -8.7bps 2.812% and 30YY =6.6bps at 2.878%.
  • TYM2 is up 25+ ticks at 119-23+ in what’s seen to be a corrective bounce, albeit driven by above average volumes. Support is eyed at 120-00 (Apr 18 high) after which it could open 122-12+ (Apr 4 high).
  • Data: Light docket with Chicago Fed and Dallas Fed activity indexes plus revisions to retail sales and inventories.
  • Bill issuance: US Tsy $51B 13W, $45B 26W bill auctions (1130ET)
  • Fed in media blackout ahead of the May 3-4 FOMC.

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