Market Roundup: Tsys Part Ways W/ Gilts For Now

Tsy futures remain weaker, near first half lows in a departure from a tendency over the last couple weeks to mirror moves in EGBs, particularly Gilts. Tsys gradually extended lows into the NY opening bell as US FI markets followed EGBs lower (UK inflation rising to 40Y highs).

• Bonds and Gilts have since parted ways, however, 10YY making new cycle highs of 4.1189% amid continued focus on rising inflation and tighter policy from the Fed (MN Fed Kashkari late Tue: rates could go above 4.5-4.75% if no progress with CPI and former Boston Fed's Rosengren telling MNI he sees prospects of a 2023 rates above 5%.)
  • Any react to mixed data lost in the shuffle: housing start weaker than expected (including revision) while build permits stronger (including revision).
• Gilts, on the other hand, reversed course, rebound a strong vote of confidence in new finance minister Jeremy Hunt in cleaning up UK markets since the Sep-23 mini-budget inception. Whether that holds remains to be seen.
• Coming up: US Tsy $12B 20Y Bond auction re-open (912810TK4) at 1300ET.
  
• Fed Speakers kick off later in the session with MN Fed Kashkari moderated Q&A at 1300ET, Chicago Fed Evans economic outlook at 1800ET and StL Fed Bullard welcome remarks/annual lecture at 1830ET. Note: Friday a black hole for data, and only one Fed speaker scheduled so far: Williams at 0910ET ahead media blackout at midnight Friday.