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Belly-Led Cheapening, Watching Productivity and Any BoC Spillover

US TSYS
  • Cash Tsys have seen mixed trade overnight but ultimately pare yesterday’s rally, sitting 2.5-4.5bp cheaper and with the belly leading the sell-off despite oil prices falling further.
  • ADP offers potential for volatility at 0815ET and we think there should be greater focus on the final Q3 productivity/ULC data at 0830ET. Also watch for any spillover from the BoC decision at 1000ET in case of any dovish surprises (in guidance rather than actual rate setting).
  • TYH4 trades at session lows of 110-20+ (-08+) but remains in the upper half of yesterday’s range. Yesterday’s high at 110-31+ marks initial resistance just before the round 111-00 with the bull cycle in play, whilst support is seen at 109-11 (20-day EMA). Volumes are solid at 350k.
  • Data: Weekly MBA mortgage data (0700ET), ADP employment Nov (0815ET), Productivity/ULCs Q3 final (0830ET), International trade Oct (0830ET)
  • Bill issuance: US Tsy $56B 17W Bill auction (1130ET)

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