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Markets Roundup: Tsys Near Cycle Lows, Mester Restrictive For Some TIme

US TSYS
  • Tsys still weaker but off midday cycle lows, 10Y yield at 4.7662% (+.0876) vs. new 16Y high of 4.7892% marked late morning. Short end continues to outperform as curves climb to the highest levels since mid- to late March, 2Y10Y tapped -34.846 briefly is currently -37.357 (+5.409).
  • Fast two-way trade noted midmorning as Treasury futures gapped lower prior to higher than expected JOLTS Job Openings (9.610M vs. 8.808M est, 8.827M prior), trading desks cited stops triggered ahead of the release.
  • See-sawed lower into fresh cycle lows by midday. The move down confirms a resumption of the downtrend and maintains the bearish price sequence of lower lows and lower highs. Support at 107-05+ has given way, with market focus on 106-23, a Fibonacci projection point, at the low. On the upside initial firm resistance is seen at 108-27, the 20-day EMA. A break would signal a possible base. For now, gains are considered corrective.
  • Cleveland Fed Mester did little to dissuade the Tsy sell-off as she reiterated that a last quarter-point rate increase by December is likely needed and rates will stay restrictive "for some time" to get inflation back to goal by the end of 2025. "If the economy looks the way it did in the next meeting similar to the way it looked at our recent meeting, I would do the further rate increase," she said.
  • Focus turns to surge of scheduled economic data tomorrow includes ADP Private Employ, ISM Services and Fed speakers Gov Bowman at a community bank conference and Chicago Fed Goolsbee open remarks at a bank conf followed by a moderated discussion with former Bank of India Gov Rajan later in the session.
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