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Markets Roundup: Tsys Hold Mid-Range, Balanced Fed Speak Ahead PCE

US TSYS
  • Treasury futures are holding firmer in afternoon trade, back near the middle of the session range following a flurry of balanced Fed speak:
  • While Atlanta Fed President Bostic remains "comfortable" with a patient Fed strategy to address inflation, he still expects the first rate cut this summer.
  • More cautiously, NY Fed President Williams reiterated the Fed has a "ways to go to sustained 2% inflation", while Boston Fed President Collins wants greater confidence in disinflation before soften policy.
  • Nevertheless, projected rate cut pricing looking steady to mildly higher at midyear vs. this morning's read: March 2024 chance of 25bp rate cut currently -2.7% w/ cumulative of -0.07bp at 5.322%; May 2024 steady at -18.4% w/ cumulative -5.3bp at 5.276%; June 2024 -55.5% from -54.5% earlier w/ cumulative cut -19.2bp at 5.137%. First full cut priced in at July w/cumulative -33.4bp at 4.995%. Fed terminal at 5.327% in Mar'24.
  • Tsy Jun'24 10Y futures are trading +6 at 110-07.5, inside technicals: resistance above at 110-28+ (20-day EMA) vs. support at 109-25+ (Low Feb 23).
  • Focus on tomorrow's core PCE print for January, consensus sits at 0.4% M/M and the below unrounded analyst estimates average very close to that at 0.39.
  • Supercore PCE could come in even stronger, with two eyeing a 0.55% increase.
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