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Market Roundup: Modest Rebound/Position Squaring Ahead Wed's CPI

US TSYS

Rates holding near recent session highs (30YY taps 2.9863% low vs. early overnight high of 3.0836%), modest rebound after Fri's steep sell-off on stronger than expected jobs gains for July: +528k vs. +250k est, dip in unemployment rate to 3.5% while AHE gained 0.5%, a tenth faster than in June.

  • Gist of today's rebound: modest unwind of Fri's positioning ahead of Wed's key CPI. A moderate read for the inflation metric will continue to soften 75bp hike expectations while another hot read will see today's bounce reverse, most likely spurring chatter over an inter-meeting hike that saw FFQ2 trade 97.64 briefly, 3 bps above the current 233 EFFR.
  • Technicals for TYU2 currently trading 119-26.5 (+14.5) - rebound after Tsys traded lower Friday clearing a number of support levels. The trend direction remains up though and recent weakness is considered corrective. The contract has remained above support at the 50-day EMA, which intersects at 119-05+. Just below this level is a trendline support at 119-03. A break of this zone would threaten the uptrend. A reversal higher would refocus attention on the bull trigger at 122-02.
  • Cross asset update: Stocks off early highs/near steady (SPX eminis at 4147.0); Spot Gold weaker +12.38 at 1787.88; Crude rebounds (WTI +0.75 at 89.76).
  • Data on tap for Tuesday: Nonfarm Productivity (-4.6% est) and Unit Labor Costs (9.8% est), US Tsy $34B 52W bill and $42B 3Y Note auctions. Primary focus on Wednesday's CPI read for July: 0.2% MoM est vs. 1.3% prior, 8.7% YoY vs. 9.1% prior.
  • Currently, 2-Yr yield is down 1.4bps at 3.2115%, 5-Yr is down 4.6bps at 2.9095%, 10-Yr is down 6.4bps at 2.7627%, and 30-Yr is down 6.2bps at 3.0041%.
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Rates holding near recent session highs (30YY taps 2.9863% low vs. early overnight high of 3.0836%), modest rebound after Fri's steep sell-off on stronger than expected jobs gains for July: +528k vs. +250k est, dip in unemployment rate to 3.5% while AHE gained 0.5%, a tenth faster than in June.

  • Gist of today's rebound: modest unwind of Fri's positioning ahead of Wed's key CPI. A moderate read for the inflation metric will continue to soften 75bp hike expectations while another hot read will see today's bounce reverse, most likely spurring chatter over an inter-meeting hike that saw FFQ2 trade 97.64 briefly, 3 bps above the current 233 EFFR.
  • Technicals for TYU2 currently trading 119-26.5 (+14.5) - rebound after Tsys traded lower Friday clearing a number of support levels. The trend direction remains up though and recent weakness is considered corrective. The contract has remained above support at the 50-day EMA, which intersects at 119-05+. Just below this level is a trendline support at 119-03. A break of this zone would threaten the uptrend. A reversal higher would refocus attention on the bull trigger at 122-02.
  • Cross asset update: Stocks off early highs/near steady (SPX eminis at 4147.0); Spot Gold weaker +12.38 at 1787.88; Crude rebounds (WTI +0.75 at 89.76).
  • Data on tap for Tuesday: Nonfarm Productivity (-4.6% est) and Unit Labor Costs (9.8% est), US Tsy $34B 52W bill and $42B 3Y Note auctions. Primary focus on Wednesday's CPI read for July: 0.2% MoM est vs. 1.3% prior, 8.7% YoY vs. 9.1% prior.
  • Currently, 2-Yr yield is down 1.4bps at 3.2115%, 5-Yr is down 4.6bps at 2.9095%, 10-Yr is down 6.4bps at 2.7627%, and 30-Yr is down 6.2bps at 3.0041%.