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Already Anticipating In-Line to Lower NFP

US TSYS
  • Treasuries looked to finish moderately higher Wednesday, upper half decent session range after early data-tied volatility. Treasury futures initially gapped higher after lower than expected ADP jobs gain of +152k vs. +175k est (192k prior down-revised to +188k).
  • Not much of a reaction to in-line S&P Global US Services PMI final (54.8 vs. 54.8 est), while Composite PMI gains slightly (54.5 vs. 54.2 est).
  • Fast two-way flow reported as Treasury futures retraced from a gap-bid to new session high of 110-12.5 (near April 5 levels) after mixed ISM Services data: Index higher than exp (53.8 vs. 51.0 est), lower Prices Paid (58.1 vs. 59.0 est), in-line Employment (47.1 vs. 47.2 est), higher New Orders (54.1 vs. 53.2 est).
  • Late year rate cut projections have gradually gained vs. late Tuesday levels (*): June 2024 at -1.3% w/ cumulative rate cut -.3bp at 5.328%, July'24 at -18% w/ cumulative at -4.8bp (-4.3bp) at 5.283%, Sep'24 cumulative -19.8bp (-19.3bp), Nov'24 cumulative -28.9bp (-27.8bp), Dec'24 -47bp (-44.3bp).
  • Focus turns to Thursday's weekly claims and Unit Labor costs as well as the ECB policy announcement, followed by Friday's headline Non-Farm payrolls data.

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