Markets Roundup: 10Y Yields Near Post-CPI Lows Ahead 10Y Auction

Treasury futures continue to see-saw near post-CPI data highs, initial gap bid followed in-line CPI read for April, MoM 0.4%, YoY 5.5%, focus turned to off-setting CPI figures: higher used car and medical care services vs. lower than expected lodging and airfare items.

• Tsy 10s currently 115-2 vs. 115-26 high, yield off 3.4407% low at 3.4464% ahead the US Treasury $35B 10Y note auction at the top of the hour. Curves off deeper inverted levels, 2s10s currently +1.518 at -49.252 (-58.897 low).
• Projected rate cuts for late 2023 are firmer but still off last week's highs: November cumulative -49.8bp (-58.7bp last wk) at 4.574%, Dec'23 cumulative -74.3bp (-84.3bp last wk) at 4.329%, while Jan'24 cumulative is running at -98.5bp at 4.088%.
• For a technical perspective, initial resistance at 115-27+ High May 8, a resumption of gains would open key resistance at 117-01+, the Mar 24 high. This is the bull trigger.
• While Treasuries maintain a positive stance, Equities have receded: SPX Eminis only +1.5 at 4135.5. Some desks cited earlier hawkish ECB headlines over the potential for a rate hike as late as September for dampening risk appetite for stocks.