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A Modest Further Rally With FOMC Ahead

US TSYS
  • Cash Tsys rally a little further after the late open following a Japanese holiday.
  • Yields are 1-1.5bps lower across the curve. The move has been aided by softer than expected UK CPI after yesterday’s CAD CPI miss, with the long-end still seeing support after yesterday’s strong 20Y auction.
  • TYM4 at 110-08+ (+ 04) has continued its lift off Monday’s low of 109-24+, a move that probed the bear trigger at 109-25+ (Feb 23 low). Resistance is seen at 110-24 (20-day EMA).
  • TY volumes are on the lower side at 245k, weighed by the holiday and likely to remain lackluster ahead of the FOMC decision.
  • Fed: FOMC decision and SEP (1400ET), Powell’s press conference (1430ET)
  • Data: Weekly MBA mortgage data (0700ET)
  • Bill issuance: Tsy to sell $60bn 17-W Bills (1130ET)

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