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(Z1) Needle Still Points South


Risk-Off Flows Seen


Risk Switch Flicks To Off


(Z1) Trend Conditions Remain Bearish


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  • Another session of bear steepening continued to work in favour of longer-end yields, boosting 10y, 20y, 30y yields to their highest levels in at least three months. The steepening bias put 2y10y spreads above 125bps for the first time since June, as the normalization message put through by last week's Fed continues to filter into prices.
  • Lack of a clear path for an extension of the US debt ceiling further unsettled investors, with Republicans and Democrats still at loggerheads on the most viable path to avoid a looming government shutdown.
  • The US Treasury completed this week's bond issuance schedule with a 7yr sale. The deep concession built into the auction supported demand, with the sale resulting in only a relatively small tail.
  • Focus Wednesday turns to pending home sales numbers as well as comments from Fed's Bullard, Harker Daly and Bostic. Fed Chair Powell appears at the ECB forum for central banking, speaking alongside Lagarde, Bailey and Kuroda.

Levels Update:

  • The Dec 21 T-Note future is down 9+ ticks at 131-16. The 2-Yr yield is up 2.3bps at 0.301%, 5-Yr yield up 3.3bps at 1.018%, 10-Yr yield up 4.3bps at 1.5305% while the 30-Yr yield is up 7.2bps at 2.0668%.