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Continued Bull Flattening Ahead Of US CPI, 10Y Auction

  • Cash Tsys see a second day of bull flattening as growth fears remain at front-of-mind, with 5Y and 10Y tenors up most strongly.
  • 10Y yields are back at pre-FOMC levels, some 27bps lower than Monday’s high, in a move that has seen 2s10s fall from just over 50bps to 35bps in two days as the curve continues to gyrate.
  • 2YY -3.1bps at 2.582%, 5YY -6bps at 2.855%, 10YY -6bps at 2.930%, 30YY -4.4bps at 3.079%.
  • TYM2 sits 15 ticks higher at 119-08 having earlier touched joint post-FOMC highs of 119-09+ on marginally below average volumes. Resistance is eyed nearby at the 20-day EMA of 119-11 after which it opens 120-18+ (Apr 27 high).
  • Data: Dominated by CPI for April (0830ET) followed by the monthly budget statement for Apr (1400ET)
  • Fedspeak: Bostic (’24 voter) is the only one scheduled but have been plenty of pop-up appearances.
  • Bond issuance: US Tsy $36B 10Y Note auction (91282CEP2) – 1300ET

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