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Market Roundup: More Month End Related Than Shift in Policy Exp

US TSYS
Tsys continue to climb off pre-NY open lows, curves mildly steeper with short end outperforming. Trading desks correct -- moves less about markets gradually discounting chances of 75bp hike on September 21, but more related to month end buying.
  • Too early for markets to make a concerted position shift away from chance of tighter policy measures three weeks hence, let alone upcoming August employment read on Friday.
  • Technicals for Dec 10Y currently at 117-01.5 (-1): Bearish theme remains intact after recent breach of 117-11+, Jul 21 low, strengthened the case for bears. Potential is seen for weakness towards 116-08 next, the Jun 28 low. Further out, attention is on 116-01+, a Fibonacci retracement. Initial firm resistance has been defined at 118-00, Friday’s high, ahead of the 50-day EMA at 118-23.
  • The 2-Yr yield is down 0.8bps at 3.4336%, 5-Yr is down 0.3bps at 3.2615%, 10-Yr is up 0.6bps at 3.1081%, and 30-Yr is up 0.5bps at 3.2205%.

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