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Early Tuesday Bid Fades

US TSYS

TYZ2 deals around late NY levels, -0-04 at 113-12.

  • Cash Tsys were 2bp richer to 2bp cheaper on Tuesday, pivoting around 10s.
  • Tuesday’s early RBA-inspired bid was bolstered by softer than expected JOLTS job opening numbers, indicating slowing labour demand, although the labour market remains very tight.
  • 2-Year yields printed below 4% for the first time in ~2 weeks during the London morning, before pulling away from best levels into the JOLTS data.
  • Still, the move lower in yields and OIS pricing wasn’t sticky, with continued hawkish Fedspeak, this time from Jefferson & Daly, as well as a pull higher in breakevens (with the front end of the curve leading the way) on the back of continued speculation surrounding a sizable cut in OPEC+ production (and a resultant bid in oil) noted.
  • Desks flagged short cover as a likely driver that influenced the early richening.
  • Cheapening in the longer end of the Gilt curve into the London close weighed on longer end Tsys (the BoE didn’t buy any Gilts in its latest round of temporary operations).
  • The latest RBNZ decision headlines in Asia-Pac hours (50bp hike fully priced and universally expected, leaving focus on guidance/statement tone), with ongoing holidays in China a limiting factor for liquidity.
  • ADP employment data, the ISM services survey and Fedspeak from Kashkari & Bostic headline Wednesday’s NY docket.
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TYZ2 deals around late NY levels, -0-04 at 113-12.

  • Cash Tsys were 2bp richer to 2bp cheaper on Tuesday, pivoting around 10s.
  • Tuesday’s early RBA-inspired bid was bolstered by softer than expected JOLTS job opening numbers, indicating slowing labour demand, although the labour market remains very tight.
  • 2-Year yields printed below 4% for the first time in ~2 weeks during the London morning, before pulling away from best levels into the JOLTS data.
  • Still, the move lower in yields and OIS pricing wasn’t sticky, with continued hawkish Fedspeak, this time from Jefferson & Daly, as well as a pull higher in breakevens (with the front end of the curve leading the way) on the back of continued speculation surrounding a sizable cut in OPEC+ production (and a resultant bid in oil) noted.
  • Desks flagged short cover as a likely driver that influenced the early richening.
  • Cheapening in the longer end of the Gilt curve into the London close weighed on longer end Tsys (the BoE didn’t buy any Gilts in its latest round of temporary operations).
  • The latest RBNZ decision headlines in Asia-Pac hours (50bp hike fully priced and universally expected, leaving focus on guidance/statement tone), with ongoing holidays in China a limiting factor for liquidity.
  • ADP employment data, the ISM services survey and Fedspeak from Kashkari & Bostic headline Wednesday’s NY docket.