Asia Flattening Develops A Little Further Post-UK CPI, Curves Away From Early ’24 Highs

Bears fail to force a break of yesterday’s base in TYH4 on the first test, which helps slow the impulse from the previously covered firmer-than-expected round of UK CPI data.

• Note that hawkish (vs. market pricing) ECB rhetoric remains evident.
• TYH4 last shows -0-02 at 111-25, 0-02+ off the base of its 0-11 range, on healthy volume of ~288K.
• A breach of 111-22+ would open the way to the Jan 5 low (111-06+). Meanwhile bulls need to retake the Jan 12 high (112-26+) to gain a firmer footing.
• Cash Tsy yields are little changed to 5bp higher on the day, with the UK CPI print developing the Asia-Pac bear flattening impulse further.
• 2s10s moves away from early ’24 highs as a result, after getting within 5bp of the December ’23 peak.
• 5s30s ticks away from multi-month steeps.
• FOMC-dated OIS shows ~16bp of cuts through the March ’24 meeting (vs. ~19bp pre-Waller) and ~149bp of cuts through ’24 (vs. ~165bp pre-Waller).