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Market Roundup: Yields Rebound Post ISM

US TSYS
Tsys trading weaker, off midmorning lows to near middle of session range heading into midday. Weaker open but generally quiet after refusing to sell off following last Fri's better than expected Nov jobs gain (+263k vs. +200k est; private +221k, gvt +42k).
  • Tsys extended session lows (30YY climbing to 3.6457% high) after ISM service index surprise increased from 54.4 to 56.5 (cons 53.3) in November, showing no sign of the continued relative weakness in last week's manufacturing print (49.0, -1.2pts).
  • Yield curves bear steepened prior to ISM, are gradually scaling back after making new inverted lows (2s10s currently +.469 at -78.292 vs. -81.395 low).
  • With Fed in policy blackout now through next week's FOMC annc on the 14th, mkts have to wait for next inflation metric, Nov PMI this Friday (0.3% MoM est vs. 0.2% prior).
  • Speaking of policy pricing in the short end, Fed funds implied hike for Dec'22 up to 52.3bp vs. 51.2bp on the open, Feb'23 cumulative 91.0bp vs. 88.2bp to 4.745% (Mar'23 108.3bp vs. 105.2bp to 4.918%) , terminal at up to 4.98% in May'23-Jun'23 vs. 4.95% earlier.

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