Back Near Friday Highs

Tsys futures near top end of session range after extending highs past to early Friday/post-NFP highs. Current 30YY -.0399 at 3.6475%; yield curves off steeper levels (2s10s +2.280 at -67.880 vs. -65.820 high).

• While bounce coincided with similar move in German Bunds into the London close, support in line w/ NY Fed SURVEY OF CONSUMER EXPECTATIONS that shows decline in short term inflation and household spending exp.
  • "Median one-year-ahead inflation expectations declined to 5.0 percent, its lowest reading since July 2021, according to the December Survey of Consumer Expectations. Medium-term expectations remained at 3.0 percent, while the five-year-ahead measure increased to 2.4 percent. Household spending expectations fell sharply to 5.9 percent from 6.9 percent in November, while income growth expectations rose to a new series high of 4.6 percent."
• Short end maintaining bid as terminal rate slips to 4.93% in Jun'23-Jul'23. Fed funds implied hike for Feb'23 -.8 to 30.9bp, Mar'23 cumulative -1.0 to 50.1bp to 4.833%, May'23 -1.0 to 59.5bp to 4.927%.
• Fed speak coming up (main focus on Chairman Powell Tue):
  • Atl Fed Bostic moderated discussion (no text, Q&A) at 1230ET,
  • SF Fed Daly WSJ interview, live event at 1230ET
  • Fed Chair Powell on central Bank independence, Riksbank event at 0900ET