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Market Roundup: Geopol Headline Sensitivity Resumes

Continued bounce off Wed's post FOMC lows: Tsy futures holding moderately higher levels across the board at midmorning, off recent session lows but well off late overnight highs (30YY currently running at 2.4164% -.0363 after tapping 2.5358% high after FOMC 25bp liftoff Wed.
  • Inflation risk remains to the upside, while Russia war in Ukraine, and rising COVID rates continue to underpin uncertainty over forward pricing: introducing curve inversion as markets start estimating rate hikes around late 2023/early 2024 (Sep23 Eurodlr futures trading under Dec23 futures; Tsy 5s10s curve inverted yesterday/today is just about steady at .396 +.617 (-1.638 low).
  • Muted react to earlier data: weekly claims lower than exp at 214k (220k est), as were continuing claims at 1.419M (1.480M est); better housing starts 1.769M (1.7M est), permits little weaker at 1.859M 1.899M est); IP +0.5%; CapU 77.6%.
  • Note: fast two-way trade after BoE hiked 25bp to .75% but softened the move with gentler policy guidance and larger infl undershoot.
  • Geopol headline sensitivity resumes: markets see-sawing on any hint of progress or lack thereof re: Russia/Ukraine peace talks. Knock-on effect: West Texas Crude (WTI) gaining again +$7.33 (7.71%) at $102.41; Gold +$22.33 (1.16%) at $1949.77. Stocks only mildly weaker: SPX emini -7 (-0.16%) at 4341.75
  • Technicals: Treasuries maintain this week’s bearish theme despite a recovery from Wed’s low of 123-25+. Monday’s strong sell-off resulted in a break of key support at 125-14+, the Feb 10 low and a bear trigger. This has confirmed a resumption of the primary downtrend and marks an extension of the bearish price sequence of lower lows and lower highs. The focus is on 123-19 next. Initial firm resistance is seen at 126-10+, the 20-day EMA.

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