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Cheaper Amidst Bank Earnings, PPI & Kashkari Still To Come

US TSYS
  • Cash Tsys trade 2-3bps cheaper, with the front-end consolidating yesterday’s ultimately sizeable rally after a hawkish reaction to the US CPI report had subsided, but the long-end pushing back more firmly back into yesterday’s range.
  • The long-end has caught up after initially outperforming, pushing 2s10s back towards yesterday’s large steepening drove a high of -27bps.
  • TYH4 at 112-07+ trades close to the day’s low of 112-05+ as it pulls back from an overnight 112-14+. Treasuries are seen in a short-term bearish corrective cycle, despite the most recent recovery, with support seen at 111-06+ (Jan 5 low).
  • Bank earnings dominate the early session, with JPM and Citi still to report after numerous banks already today. After that the docket is quite clear cut with PPI inflation in focus for its usual clues to core PCE inflation, the last data for the week.
  • Data: PPI Inflation Dec (0830ET)
  • Fedspeak: Kashkari (non-voter) in fireside chat at 1000ET with no text

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