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Cheaper On UK CPI But TY Recent Lows Intact

US TSYS
  • Treasuries maintain the sell-off seen after less moderation than expected in UK CPI inflation, although the long-end remains above the week’s lows to consolidate yesterday’s flattening.
  • Cash yields sit 2-4bps higher on the day, led by 3s. 2s10s little changed at -42bps (-0.5bp).
  • TYM4 trades at 109-00+ (- 07) on solid volumes a little above 300k. The week’s low at 108-30+ provides tentative support before a more meaningful 108-29 (20-day EMA) and a key 108-15 (May 14 low).
  • A TU/FV/UXY fly block provided the most meaningful pre-NY flow, looking for an extension of the recent 5-Year richening on that structure (representing a similar trade to London flow seen in late April).
  • The FOMC minutes headline today’s session but existing home sales could be of note with asymmetrical risk to market reaction from a downside surprise, before the 20Y auction after two successive strong sales.
  • Data: MBA mortgage report May 17 (0700ET), Existing home sales Apr (1000ET)
  • Fedspeak: Goolsbee opening remarks (0940ET), FOMC minutes (1400ET)
  • Note/bond issuance: US Tsy $16B 20Y Bond sale - 912810UB2 (1300ET)
  • Bill issuance: US Tsy $60B 17W Bill Auction (1130ET)
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  • Treasuries maintain the sell-off seen after less moderation than expected in UK CPI inflation, although the long-end remains above the week’s lows to consolidate yesterday’s flattening.
  • Cash yields sit 2-4bps higher on the day, led by 3s. 2s10s little changed at -42bps (-0.5bp).
  • TYM4 trades at 109-00+ (- 07) on solid volumes a little above 300k. The week’s low at 108-30+ provides tentative support before a more meaningful 108-29 (20-day EMA) and a key 108-15 (May 14 low).
  • A TU/FV/UXY fly block provided the most meaningful pre-NY flow, looking for an extension of the recent 5-Year richening on that structure (representing a similar trade to London flow seen in late April).
  • The FOMC minutes headline today’s session but existing home sales could be of note with asymmetrical risk to market reaction from a downside surprise, before the 20Y auction after two successive strong sales.
  • Data: MBA mortgage report May 17 (0700ET), Existing home sales Apr (1000ET)
  • Fedspeak: Goolsbee opening remarks (0940ET), FOMC minutes (1400ET)
  • Note/bond issuance: US Tsy $16B 20Y Bond sale - 912810UB2 (1300ET)
  • Bill issuance: US Tsy $60B 17W Bill Auction (1130ET)