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Bond Rout Continues, 2s10s Curve 24bp Off Last Wk Lows

US TSYS

Tsys quickly reversed overnight gains after the NY open, bonds extending lows through midday, yield curves bear steepened with 2s outperforming: 2s10s +9.728 at -33.191 -- back to mid September levels after the spd extended inversion to new low of -57.943 pre-FOMC.

  • Tsy 2YY currently -.0371 at 4.3035%, 30YY +.1130 at 3.8530%. while 10YY +.0513 at 3.9758 -- up appr 235bp already this year - more than any full year since 1962!
  • Tsy futures initially scaled back gains following in-line to better than expected Durable Goods data (-0.2% vs. -0.3% est; ex-trans in line at 0.2%), Cap Goods +1.3% vs. +0.2% est.
  • Surge in Aug new home sales (+28.8% to .685M SAAR), coupled with rise in consumer confidence to 108.0 vs. 104.6 est. spurred renewed selling in 5s-30s. Technical selling in TYZ2 as futures drop through first support of 111-00+ (Low Sep 26) to 110-27, next key support: 110-13+ 3.0% 10-dma envelope to 110.
  • Session's Fed speak didn't really cover any new ground, while the BoE lead economist Pill comments did little to calm markets as short end Gilts priced in additional 250bp in hikes by year end! GBP knocked lower in early afternoon trade to 1.0687 -.0002.
  • Tsy futures extended session lows after $44B 5Y note auction (91282CFM8) tailed: 4.228% high yield vs. 4.202% WI; 2.27x bid-to-cover vs. 2.30x last month.
  • The 2-Yr yield is down 3.5bps at 4.3056%, 5-Yr is up 1.5bps at 4.2064%, 10-Yr is up 3.3bps at 3.9573%, and 30-Yr is up 8.3bps at 3.8225%.
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Tsys quickly reversed overnight gains after the NY open, bonds extending lows through midday, yield curves bear steepened with 2s outperforming: 2s10s +9.728 at -33.191 -- back to mid September levels after the spd extended inversion to new low of -57.943 pre-FOMC.

  • Tsy 2YY currently -.0371 at 4.3035%, 30YY +.1130 at 3.8530%. while 10YY +.0513 at 3.9758 -- up appr 235bp already this year - more than any full year since 1962!
  • Tsy futures initially scaled back gains following in-line to better than expected Durable Goods data (-0.2% vs. -0.3% est; ex-trans in line at 0.2%), Cap Goods +1.3% vs. +0.2% est.
  • Surge in Aug new home sales (+28.8% to .685M SAAR), coupled with rise in consumer confidence to 108.0 vs. 104.6 est. spurred renewed selling in 5s-30s. Technical selling in TYZ2 as futures drop through first support of 111-00+ (Low Sep 26) to 110-27, next key support: 110-13+ 3.0% 10-dma envelope to 110.
  • Session's Fed speak didn't really cover any new ground, while the BoE lead economist Pill comments did little to calm markets as short end Gilts priced in additional 250bp in hikes by year end! GBP knocked lower in early afternoon trade to 1.0687 -.0002.
  • Tsy futures extended session lows after $44B 5Y note auction (91282CFM8) tailed: 4.228% high yield vs. 4.202% WI; 2.27x bid-to-cover vs. 2.30x last month.
  • The 2-Yr yield is down 3.5bps at 4.3056%, 5-Yr is up 1.5bps at 4.2064%, 10-Yr is up 3.3bps at 3.9573%, and 30-Yr is up 8.3bps at 3.8225%.