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Bond Bid Resumes As Yld Curves Fall To April 2020 Lvls

US TSYS
Back to last week's theme: Tsy 30Y Bonds outperformed Monday, near late session highs after the bell (30YY 2.0076 low) that lent to broad yld curve flattening with 5s30s back to late April 2020 levels.
  • After some position unwinds in Tsys last Friday as equities climbed to new October highs, support for Bonds returned even as equities made new highs for October: ESZ1 4478.0.
  • Trading desks report better selling in 5s-10s from real$ and bank portfolios, tactical steepener unwinds, deal-tied selling as corporate and supra-sovereign issuance picked up. Note, Goldman Sachs issued $9B over 5 tranches Monday, while the Peoples Rep of China held investor calls over multi-tranche sr bond issuance ($4B est over 3-, 5-, 10- and 30Y bonds) later this week.
  • Little react to data: Sep industrial production -1.3%; capacity utilization 75.2%, Aug IP revised -0.1%.
  • Heavy option volumes continued to focus on downside put buying as rate hike expectations for late 2022 gained momentum.
  • Notable headlines: re-appointment odds for Fed chairman Powell fell to as low as 43% on PredictIt in the last couple of hours - triggered by The American Prospect publishing a piece titled "Jerome Powell Sold More Than a Million Dollars of Stock as the Market Was Tanking".
  • After the bell, 2-Yr yield is up 2.2bps at 0.4173%, 5-Yr is up 3.5bps at 1.1601%, 10-Yr is up 1.2bps at 1.5826%, and 30-Yr is down 2.6bps at 2.0153%.

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