Market Roundup: Still Playing Out Softer Inflation Measure

Short end remains anchored at midmorning w/ carry-over selling in long end leaking into 10s and 5s - noted late yesterday as well, short end holding onto cooler inflation/50bp hike over 75bp. Curves continue to steepen off 22 year inverted lows (2s10s +8.677 at -35.054).

• A lot of time between now and Sep 16 FOMC for data to develop -- the next CPI read for August on September 13. Session data PPI final demand inflation surprisingly fell -0.5% M/M (cons +0.2%), pushing the annual rate down from 11.3% to 9.8% Y/Y (cons 10.4%).
  
• Core measures of PPI (ex food & energy or ex food, energy & trade) also missed by two tenths at 0.2% M/M but that was more in line with yesterday's core CPI miss with the Bloomberg survey not materially updated.
• On flow, Chunky block sales in 5s, 30s and now 30Y Ultras adding to weaker tone.
• Technicals for TYU2 currently trading 119-15 (-9) trend direction remains up and the latest move lower is still considered corrective. Importantly for bulls, the contract is trading above support at the 50-day EMA, which intersects at 119-07+. There is also a trendline support at 119-16. A break of this support zone would threaten the uptrend. A reversal higher would strengthen bullish conditions and refocus attention on 122-02.
• Cross asset update: Stocks firmer (SPX eminis at 4148.5 +38.75); Spot Gold little firmer at 1792.01; Crude firmer (WTI +0.81 at 92.74).
• Data on tap for Friday: Import/Export prices, University of Michigan Sentiment (52.5 est vs. 51.5 prior)
• Currently, 2-Yr yield is down 3.3bps at 3.1813%, 5-Yr is up 0.9bps at 2.9302%, 10-Yr is up 5.4bps at 2.8349%, and 30-Yr is up 7.7bps at 3.1094%.