Futures Firm In Early London Trade, Curve Twist Steepens

Tsys squeeze higher as noted elsewhere, with the cash curve twist steepening on the day as the benchmarks run 6bp richer to 0.5bp cheaper, pivoting around 10s. This comes after a block seller in US futures (-2.5K) applied some pressure to the longer end of the curve in Asia while the post-CPI reaction in the region supported the front end.

• TY futures last +0-08, just off the top of a 0-10 range, with key short-term resistance (112-12+) breached, allowing bulls to look to the July 3 high (112-17+). A break there would allow bulls to turn focus to the 50-day EMA (113-13+).
• A narrower than expected monthly trade surplus out of China (coupled with softer than expected internals) did little for Tsys, while the latest move seems flow-driven, with no fresh news noted.
• FOMC-dated OIS shows ~22bp of tightening for this month’s gathering, while cumulative pricing through November has eased to ~29bp vs. the mid 30s priced at this time yesterday, owing to the CPI print.
• Fedspeak & PPI will be eyed in the wake of yesterday’s CPI print, while 30-Year Tsy supply will come to market and weekly jobless claims data will cross.