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Markets Roundup: Curves Bend Flatter Late, Hike Projections Firm

US TSYS
  • Rates trade mixed after the bell, well off early session highs after June Retail Sales comes out weaker than expected at +0.2% vs. +0.5% est (May up-revised to +0.5%, however, from 0.3%). Tsys gained slightly after Industrial Production comes out lower than expected (-0.5% vs. 0.0% est) May IP down-revised to -0.5% vs. -0.2%.
  • Futures receded, curves bending flatter as support gradually waned (partially tied to larger than expected $8.5B Wells Fargo 2-part issuance, additional rate locks weighing on 5s-10s through the second half, 2s10s -2.877 at -96.865. Sep'23 10Y futures at 112-22 (-1) holding above initial technical support of 112-07.5 (Jul 13 low).
  • Projected rate hike expectations through year end gained: July 26 FOMC is 93.6% w/ implied rate of +23.4bp to 5.313%. September cumulative of +27.4bp at 5.352%, November cumulative of 32.6bp at 5.404%, and December cumulative of 27bp at 5.348%. Fed terminal holding at 5.41% in Nov'23.
  • Focus turns to release of Building Permits and Housing Starts data tomorrow, US Tsy $12B 20Y Sale re-open.

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