March Inflation CPI Measure Less Than Feared

Tsy futures gradually extended early session highs after weaker than exp March CPI, MoM 1.2% in-line w/est., 8.5% YoY edges past 8.4% est. Core YoY 6.5% slightly weaker than est, used car prices cited.

• Support ebbed back to midmorning levels after $34B 10Y note auction re-open (91282CDY4) tailed again: 2.720% high yield vs. 2.690% WI; 2.43x bid-to-cover off last month's 2.47x.
• Yield curves bull steepened vs bear steepening for a change - underpinned by another (Mon's Bloocked print of 2s vs. 5s and ultra-bond) massive steepener package Block at 1344:06ET
  • +41,733 TUM2 105-28 buy through 105-26.5 post-time offer vs.
  • -3,000 USM2 142-21, sell through 142-26 post-time bid
  • -3,189 WNM2 165-00, sell through 165-08 post-time bid
• Stocks trade weaker after the FI close, reversing off midday highs after London close while some traders attribute late sell interest to headlines that US has credible intel Russia proposes use of chemical weapons in Ukraine.
• Markets have been taking geopol headline risk with more than a grain of salt of late. Weakness may be more attributed to start of earnings cycle with slew of banks (trading weaker) reporting: JP Morgan and BlackRock due Wed, before Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo follow.
• Data on tap for Wednesday at 0830ET:
  • PPI Final Demand MoM (0.8%, 1.1%); YoY (10.0%, 10.6%)
  • PPI Ex Food and Energy MoM (0.2%, 0.5%); YoY (8.4%, 8.4%)
  • PPI Ex Food, Energy, Trade MoM (0.2%, 0.5%); YoY (6.6%, 6.6%)
  • Last leg of the week's Tsy supply: US Tsy $20B 30Y Bond auction re-open (912810TD0) at 1300ET.