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Curve Bear Steepens On Friday, Fed In Blackout Period

US TSYS

TYH3 deal at 115-01+, -0-00+, little changed from Fridays settlement levels.

  • Cash Tsys finished 4-9bp cheaper on Friday as the curve bear steepened.
  • Pressure in Global FI weighed on Tsys on Friday with hawkish ECB speak from Lagarde the initial catalyst.
  • Home Sales fell by less than expected in December, allowing another step cheaper in the space.
  • Positioning adjustments, after a strong start to the year for Tsys, and rate locking activity also weighed.
  • Fedspeak from Philadelphia Fed President Harker ('23 voter) reiterated comments seen in previous communique. Kansas City Fed President George indicated the Fed would be more patient at this time to see if inflation remains on a downward trend.
  • Gov Waller noted that rates were "pretty close" to a sufficiently restrictive level. He also said he favours a shift to a 25bp hike at the February meeting but anticipates further tightening going forward. The comments helped Tsys pare losses into Friday's close.
  • There's a thin docket in Asia-Pac today as China begins a week long Lunar NY holiday, wider regional liquidity will be affected. Further out, PCE, Jan Preliminary PMIs and Q4 GDP headline the week. The Fed is now in its policy blackout period ahead of its February meeting.
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TYH3 deal at 115-01+, -0-00+, little changed from Fridays settlement levels.

  • Cash Tsys finished 4-9bp cheaper on Friday as the curve bear steepened.
  • Pressure in Global FI weighed on Tsys on Friday with hawkish ECB speak from Lagarde the initial catalyst.
  • Home Sales fell by less than expected in December, allowing another step cheaper in the space.
  • Positioning adjustments, after a strong start to the year for Tsys, and rate locking activity also weighed.
  • Fedspeak from Philadelphia Fed President Harker ('23 voter) reiterated comments seen in previous communique. Kansas City Fed President George indicated the Fed would be more patient at this time to see if inflation remains on a downward trend.
  • Gov Waller noted that rates were "pretty close" to a sufficiently restrictive level. He also said he favours a shift to a 25bp hike at the February meeting but anticipates further tightening going forward. The comments helped Tsys pare losses into Friday's close.
  • There's a thin docket in Asia-Pac today as China begins a week long Lunar NY holiday, wider regional liquidity will be affected. Further out, PCE, Jan Preliminary PMIs and Q4 GDP headline the week. The Fed is now in its policy blackout period ahead of its February meeting.