July 22, 2022 15:09 GMT
Tsys holding near midmorning highs at the moment, extending the overnight rally after weak US services sector PMI data followed contractionary reading in France and Germany overnight.
- Early bid: Tsys surged after France and Germany mfg PMIs both missed expectations overnight, contractionary sub-50 reads at 49.6 and 49.2 respectively (UK mfg PMI bucked trend, coming out at 52.2 vs. 52.0 est).
- Volumes spiked as Tsy futures furthered the rally (30YY 2.9477% low) after preliminary July reading of the SP Global mfg PMI of 52.3 vs. 52.0 exp (52.7 in June), service sector miss at 47.0 vs. 52.7 est (steady to June read).
- Heavy first half volume w/ TYU2>1.2M, yield curves bull steepening off inverted lows: 2s10s +3.077 -18.372, 5s30s +6.124 at 11.753 as the forward rate hike expectations in latter half of the year cooled on the data. A 75bps hike is still expected next week while a 50bps move at the Sep policy meeting looks more likely.
- Fed terminal rate now seen at 3.33%, from what had been seen at 3.69% after last week's US CPI beat.
- Cross assets: Spot gold extends early gains +12.92 at 1731.73, crude makes modest gains: WTI +0.51 at 96.86.