Free Trial
USDCAD TECHS

Corrective Pullback

US TSY FUTURES

BLOCK, Late 10Y Buy

US TSYS

Eurodollar/Tsy Option Roundup

AUDUSD TECHS

Needle Still Points South

US

Biden Approval Remains Underwater

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
US TSYS SUMMARY

Tsys initially sank on above-expected May inflation, but decisively reversed course shortly thereafter to session highs with participants looking through the 29-year high in core Y/Y CPI. The curve bull flattened and futures volumes pushed 2M for the first time since the Jun-Sep roll.

  • And not at all a risk-off move, given that stocks hit all-time highs. Indeed it was basically one-way traffic lower for yields after the initial spike, with bears appearing to capitulate toward the end of the session.
  • The 2-Yr yield is down 0.6bps at 0.1488%, 5-Yr is down 2.1bps at 0.7291%, 10-Yr is down 3.4bps at 1.457%, and 30-Yr is down 1.7bps at 2.1518%. Sep 10-Yr futures (TY) up 5.5/32 at 132-30 (L: 132-10 / H: 132-30.5)
  • Implied breakevens headed modestly higher, meaning real yields fell sharply - suggesting market participants both acknowledge higher inflation pressures, while also deferring to the FOMC's insistence that the current spike is only temporary (and that they will be patient before tightening policy).
  • The strength in Tsys made an otherwise mediocre 30Y Bond auction look even better given the circumstances - 1.2bps tail, bid-cover a little better than previous auction but weaker than average. While yields bounced off session lows and curve steepened slightly following the auction, the demand for duration was impressive given the lack of concession, and the rally continued afterward.
  • It's a quiet calendar from here until the FOMC, with UMich sentiment and a new NY Fed purchase schedule the only things on the data /supply/speaker docket until Tuesday.
MNI London Bureau | +44 203-865-3807 | tim.cooper@marketnews.com
MNI London Bureau | +44 203-865-3807 | tim.cooper@marketnews.com

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.