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Early session highs around the opening bell were short lived Wednesday -- support for Tsy futures in lead-up to import/export prices evaporated despite the weaker than forecasted August import price data:
- Prices for U.S. imports decreased 0.3 percent in August following a 0.4-percent advance in July, while Export prices rose 0.4 percent in August, after increasing 1.1 percent the previous month.
While August's softer-than-expected CPI reading lent "credence to the Fed's view that the flurry of inflation experienced earlier this year will prove 'transitory' .. inflation pressures remain strong beyond pandemic-affected categories."
Current session trade included some flatteners:
- -9,767 FVZ1 123-20.25, post-time bid at 0930:00ET vs. +4,001 UXYZ1 148-13 post-time offer
- overnight/late Tuesday Block: 5s/ultra-bond flattener: -9,409 FVZ 123-21.25, sell through 123-21.5 post-time bid at 2339:11ET vs. +1,362 WNZ 200-00, nuy through 199-26 post time offer
Background color on large 10Y Block sale (-10,327 TYZ1 at 133-12 (-7.5 and below session low of 133-13). Sources say was dv01 neutral spd vs. 4,720 RXZ1 at 171.60, and a likely unwind as well. Trigger for executing the spd is another matter.
The 2-Yr yield is up 0.4bps at 0.2111%, 5-Yr is up 1.3bps at 0.7983%, 10-Yr is up 1.9bps at 1.3022%, and 30-Yr is up 0.7bps at 1.8659%.