Early Bid Extends, Aided By European Paper, FV Block Buying & Technical Breaks

Tsys have extended on the bid seen during the Asia-London handover and last sit1 2-11bp richer on the day, with the post-CPI bull steepening theme extending further, leaving the 2-/10-Year yield curve close to 30bp off inverted YtD extremes. TYU3 is just off the peak of its 0-17+ range, last dealing 0-13+ on the day, with little in the way of meaningful technical resistance seen until the 50-day EMA.

• 2-Year Tsy yields are nearly 50bp shy of their YtD peak, registered just one week ago.
• Technical breaks and bids in core European FI markets has further aided the move, with a lack of meaningful macro headline flow noted thus far, while the previously outlined 17K block buy in FV futures (~$728K DV01) also helped underpin.
• FOMC-dated OIS pricing remains on the defensive, with ~21bp of tightening showing for this month’s meeting, a cumulative 27bp of tightening showing through November before 81bp of cuts are priced through Jun ’24.