A Mixed Day Sees Treasuries Almost Where They Started

A mixed day for Treasuries, back close to where they started today after moving lower on strong data and hawkish Bullard commentary before retracing their steps prior to Yellen's debt limit comments.

• Treasuries slightly lower today with key benchmark yields up circa 0.5bps across the curve. The 2s/10s has steepened in the past hour to leave it unchanged after yesterday's ~6bp steepening.
• Bullard said the Fed should "tack in a more hawkish direction" to allow it to tighten less aggressively further out and sees two data-dependent rate hikes in 2022.
• Yellen meanwhile said the Treasury doesn't have a "great deal of time" left for borrowing past Dec. 3, prompting shorter-dated bills to sell off.
• Data recap. Retail sales were up +1.7% M/M in Oct (cons. +1.5%) with similar strength in the control group, likely heavily boosted by strong price rises. Strength was concentrated in online shopping, electronics and building materials (latter two marrying with today's strong Home Depot/WMT results) whilst there was continued relative weakness in the dining out sector as it decelerates post-Delta.

What to watch for:

• Upcoming data. TIC flows for Sep still to come at 1600ET before housing starts/building permits for Oct 0830ET tomorrow (permits seen at +2.8% M/M after -7.7% in Sep).
• Upcoming Fed speakers. Daly at 1530ET. Many Fed speakers tomorrow: Williams (0910ET), Bowman (1100ET), Mester & Waller (1120ET), Daly & Waller (1240ET), Evans (1605ET) and Bostic (1610ET).
• Other events. Biden's Fed Chair decision is supposedly imminent and the Build Back Better plan could be put to the House some point this week.
• Next scheduled NY Fed purchases: Tsy 22.5Y-30Y (appr $1.600B) on Thu 1010-1030ET, TIPS 1Y-7.5Y (appr $1.775B) on Fri 1010-1030ET.