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Markets Roundup: Fast Recovery After Weak Auctions

  • Treasury futures have fully recovered from today's weak 3Y (1.8bp tail) and 10Y (1.4bp tail) auctions - have climbed to current session highs across the board and breaching early overnight highs.
  • At the moment, Mar'24 2Y futures +.38 at 102-05.75, 10Y futures +3.5 at 110-12; curves steeper but off highs (3M10Y +.318 at -116.682, 2Y10Y +.578 at -48.942).
  • The 10Y contract is through initial technical resistance of 111-09+ High Dec 7, focus on 111-19: 1.236 proj of the Oct 19 - Nov 3 - Nov 13 price swing.
  • Unusual to see rates improve so quickly after weak auction performance, one desk chalking it up to nothing more than the "auction process going well and putting supply in the rearview ahead of CPI/PPI and the Fed" one desk posited.
  • While Dec remains static, the rebound has seen projected rate cuts gain traction in late trade, see 1421ET bullet.

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