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Belly-Led Rally From European PMIs, Payrolls Prelim Benchmark Revisions Ahead

  • Cash Tsys has seen a belly-led rally overnight as the US session gets underway, driven by softer than expected European service PMIs. It sees the front-end reverse most of yesterday’s sell-off whilst further out the curve we are increasingly back to Monday’s levels.
  • Data are in focus today with August flash US PMIs, preliminary benchmark revisions for the establishment survey including payrolls plus new home sales, before attention on 20Y supply.
  • 2YY -4.9bp at 4.997%, 5YY -7.2bp at 4.416%, 10YY -6.5bp at 4.259%, 30YY -5.0bp at 4.350%.
  • TYU3 trades 12 ticks higher at 109-14 on strong cumulative volumes of 445k. Resistance is seen at 109-28+ (Aug 18 high) but trend conditions are seen remaining bearish, with support at 108-28 (Aug 22 low).
  • Data: Weekly MBA mortgage data (0700ET), S&P Global US prelim PMIs Aug (0945ET), Preliminary Payrolls Benchmark Revision (1000ET), New home sales Jul (1000ET)
  • Note/bond issuance: US Tsy $16B 20Y Bond sale (912810TU2) – 1300ET
  • Bill issuance: US Tsy $24B 2Y FRN R/O (91282CHS3), $50B 17W Bill auctions – 1130ET

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