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BoE Emergency Action Talk Spurs Higher US Tsy Ylds

US TSYS

Tsys remain weaker - bonds extending lows through midday, as yield curves bear steepened back near last Thu's inverted highs: 2s10s +9.389 to -43.334 after 2YY made new 15Y high of 4.3450% overnight, currently 4.3147% +.1136.

  • Carry-over selling in US FI this morning partially tied to London mkt pricing in chance of BOE emergency rate hike (before next BoE in Nov) in aftermath of UK gov's "Growth Plan" (ie fiscal event) and further comments from the Chancellor over the weekend that more tax cuts are to come.
  • Bonds looking to test session lows after latest BOE headlines: "BOE BAILEY WON'T HESITATE TO CHANGE RATES BY AS MUCH AS NEEDED" .. "TO ASSESS POUND DROP, FISCAL PLAN AT NEXT SCHEDULED MEETING", bbg
  • Limited react to Fed speak refrain on the day: Atlanta Fed Bostic virtual event:
    NEED TO CONTROL INFLATION, WILL BE VOLATILE UNTIL THEN .. WE'VE STILL GOT A WAYS TO GO TO CONTROL INFLATION, Bbg.
  • Otherwise limited react to second tier data: CHICAGO FED AUG. NATIONAL ACTIVITY INDEX: 0.00, Consensus 0.23 from 0.29 in Jul; US SEPT. DALLAS FED MANUFACTURING INDEX AT -17.2 VS -12.9, consensus -10.
  • Tsy futures remained broadly weaker/near lows after $43B 2Y note auction (91282CFN6) tails again: 4.290% high yield vs. 4.275% WI; 2.51x bid-to-cover vs. 2.49x prior.
  • Currently, the 2-Yr yield is up 10.3bps at 4.3039%, 5-Yr is up 17.8bps at 4.1567%, 10-Yr is up 19.7bps at 3.8817%, and 30-Yr is up 9.6bps at 3.7018%.
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Tsys remain weaker - bonds extending lows through midday, as yield curves bear steepened back near last Thu's inverted highs: 2s10s +9.389 to -43.334 after 2YY made new 15Y high of 4.3450% overnight, currently 4.3147% +.1136.

  • Carry-over selling in US FI this morning partially tied to London mkt pricing in chance of BOE emergency rate hike (before next BoE in Nov) in aftermath of UK gov's "Growth Plan" (ie fiscal event) and further comments from the Chancellor over the weekend that more tax cuts are to come.
  • Bonds looking to test session lows after latest BOE headlines: "BOE BAILEY WON'T HESITATE TO CHANGE RATES BY AS MUCH AS NEEDED" .. "TO ASSESS POUND DROP, FISCAL PLAN AT NEXT SCHEDULED MEETING", bbg
  • Limited react to Fed speak refrain on the day: Atlanta Fed Bostic virtual event:
    NEED TO CONTROL INFLATION, WILL BE VOLATILE UNTIL THEN .. WE'VE STILL GOT A WAYS TO GO TO CONTROL INFLATION, Bbg.
  • Otherwise limited react to second tier data: CHICAGO FED AUG. NATIONAL ACTIVITY INDEX: 0.00, Consensus 0.23 from 0.29 in Jul; US SEPT. DALLAS FED MANUFACTURING INDEX AT -17.2 VS -12.9, consensus -10.
  • Tsy futures remained broadly weaker/near lows after $43B 2Y note auction (91282CFN6) tails again: 4.290% high yield vs. 4.275% WI; 2.51x bid-to-cover vs. 2.49x prior.
  • Currently, the 2-Yr yield is up 10.3bps at 4.3039%, 5-Yr is up 17.8bps at 4.1567%, 10-Yr is up 19.7bps at 3.8817%, and 30-Yr is up 9.6bps at 3.7018%.