Market Roundup: EU Energy Concerns Spurs Rate Hike Pricing

Tsys holding near midday session lows, 30YY back over 3.25% to 3.2661% high, last seen July 10. No obvious headline driver for continued weakness since rates extended session lows around 1000ET.

• Coming into the session, however, Tsys tracked overnight price action in EGBs, as Tsys scaled off overnight highs (30YY tapped 3.1828% low) yield curves flatter with short end underperformed, 2s10s slipped to 33.136 inverted low (-30.705 at midday , -4.325).
• Domino effect from soaring European energy prices (gas appr 10% higher, coal +5.1%) coupled with ongoing Russia/Ukraine war effect on gas prices and China growth slow-down is weighed on Euro, Sterling and short end EGBs on prospect of higher rates to contain inflation.
• Technicals for TYU2 currently trading 117-25 (-10.5), Treasuries maintain a softer tone and the contract is trading at its recent lows. 118-05, 50.0% of the Jun 14 - Aug 2 bull cycle, has been cleared and this signals scope for an extension towards 117-14+ next, the Jul 21 low. Price has recently cleared a trendline support drawn from the Jun 14 low and this reinforces the current bearish theme. Initial firm resistance is at 119-31, the Aug 15 high.
• Muted midday trade w/ focus on this week's annual Jackson Hole Economic Symposium: Reassessing Constraints on the Economy and Policy on Friday, August 26 as Chairman Powell discusses the Fed's economic outlook at 1000ET (0800 local), text is expected but no Q&A.