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Market Roundup: Rates Firmer as Fed Rallies Around 50Bp Moves

US TSYS
Rates still trading firmer at midmorning have scaled back from early session highs, curve flattening that started in the short end has moved to include intermediates (off last week's inversion, 5s30s have slipped to 7.199 low vs. 10.118 high).
  • Have fears over China supply chain issues, inflation surge and knock-on effects of Russia war in Ukraine been discounted? Unlikely. Nevertheless, stronger EGBs lending partial impetus for FI bounce off Mon's lowest levels since Dec 2018 today.
  • No data today, intertest in Wed's APR CPI. Current focus on multiple Fed speakers, short end anchored as NY Fed Williams and Cleveland Fed Mester 50bp rate increase base case "makes sense" over the next couple meetings. Richmond Fed Barkin said US doesn't "need a recession to contain inflation", adds Fed can reassess once rates are "into range of neutral".
  • US 10Y technicals: Mon's move lower confirms a resumption of the primary downtrend and an extension of the price sequence of lower lows and lower highs. Recent corrections have tended to be shallow and this also highlights bearish sentiment. Sights are on 116-28 next, a Fibonacci projection.
  • On the flipside, key resistance is 120-18+, Apr 27 high. Short-term gains are considered corrective.
  • Cross-assets: WTI Crude Oil (front-month) weaker by $0.81 at $102.28 (volatile trade, crude weakened earlier as it looks like Russia oil ban in EU stalls); Gold gains +2.32 at $1856.50.
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