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Curve Bear Steepened On Firmer PPI Data, Fedspeak


TYH3 deals at 111-23, -0-05+, in line with levels seen late in the NY session

  • Cash Tsys finished 1-8bps cheaper on Thursday, the curve bear steepened.
  • Tsys were pressured as PPI data was stronger than expected in January. Weekly claims data showed that the labour market continues to be tight.
  • Losses extended as Cleveland Fed President Mester noted she saw a compelling case for a 50bps hike at the last meeting. Adding the Fed can accelerate the pace of hikes if required.
  • Tsys retested session lows as St Louis Fed President Bullard said he wouldn't rule out supporting a 50bp hike at the next meeting.
  • A late block trade in TY futures (+7K) failed to provide broad support to the space.
  • Fedspeak from Cleveland Fed President Mester is on the wires shortly. Further out CPI data from France and US terms of trade will cross. Fedspeak from Richmond Fed President Barkin and Fed Gov Bowman is also due on Friday.

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