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Market Roundup: Inside Range Ahead Midweek Inflation Data

US TSYS

Still weaker, Tsy futures have see-sawed off early session lows/near mid-range on light volumes (TYU2<625k). Morning data spurred buying in intermediates to long end after:

  • Nonfarm labour productivity was roughly as expected in the preliminary Q2 release, falling -4.6% Q/Q saar after -7.4% as output fell -2.1%
  • With hourly compensation jumping 5.7% (but -4.4% in real terms), ULCs saw a smaller moderation than expected from 12.7% to 10.8% (cons 9.5%).
  • Technicals for TYU2 currently trading 119-17.5 (-10.0) - despite futures unwinding a fair portion of Mon's bounce trend direction remains up and recent weakness is still considered corrective. The contract has remained above support at the 50-day EMA, which intersects at 119-06+. Just above this level is a trendline support at 119-07+. 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 lows (SPX eminis at 4129.25 -12.50); Spot Gold firmer +4.20 at 1793.16; Crude firmer (WTI +0.66 at 91.42).
  • Data on tap for Wednesday: 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 up 5bps at 3.2552%, 5-Yr is up 4.8bps at 2.954%, 10-Yr is up 2.2bps at 2.7791%, and 30-Yr is up 0.9bps at 2.9936%.

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