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Markets Roundup: Paring Gains Ahead Corp/Tsy Supply

US TSYS

Treasury futures paring gains again, currently -1 to -2 weaker for the most part, bonds holding onto modest gain (USU3 +4 at 126-28). No obvious headline or flow driver after futures extended session lows at midmorning.
Likely some deal-tied hedging pressure: rate locks on expected corporate issuance (Morgan Stanley 4-tranche for instance, size still TBA) and/or pre-auction short sets ahead Tsy's $12B 20Y bond auction re-open at 1300ET.
See-saw action on modest summer participation. Tsys traded firmer overnight after lower than expected UK CPI data (0.1% MoM vs. 0.4% est) saw front month Sep'23 10Y futures hit 113-06.5 high.
Projected rate hike expectations gain slightly: July 26 FOMC is 96% w/ implied rate of +24bp to 5.318%. September cumulative of +27.2bp at 5.35%, November cumulative of 32.7bp at 5.404%, and December cumulative of 27.6bp at 5.353%. Fed terminal holding at 5.405% in Nov'23.

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