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Markets Roundup: Tsys/Stocks Gaining, 10Y Yield Below 4.1%

US TSYS
  • Tsy futures as well as stocks are extending session highs in the last few minutes. Mar'24 10Y futures (TYH4 taps 111-16.5 high, +15.5) continues to see-saw near the top end of range since January 18. Initial technical resistance at 111-18/112-26+ 20-day EMA / High Jan 12. 10Y yield slips below 4.1% to 4.0893% low.
  • Focus remains on gradually lower inflation and timing of first FOMC rate cut since March 2020 in the lead up to this Wednesday's policy announcement.
  • No action expected from the Fed Wednesday, but dealer estimates of when and by how much is varied (GS: 25bp cut in March, 5 total cuts in 2024 to 4.25%; DB 3.75% by year end, UBS 2.75% year end; flipside: Santander est's 50bp by year end to 5%).
  • Projected rate cuts in H1 2024 steady to mixed: January 2024 cumulative -.5bp at 5.324%, March 2024 chance of 25bp rate cut -50.3% w/ cumulative of -13.1bp at 5.198%, May 2024 at -81.8% vs -80.8% this morning w/ cumulative -32.8bp at 5.001%, June 2024 -98.2% vs. -95.4% this morning w/ cumulative -5732bp at 4.755%. Fed terminal at 5.325% in Feb'24.
  • Cross asset summary: stocks near recent highs (SPX eminis 4927.5 vs. Fri's 4934.25 contract high), Crude weaker (WTI -1.11 at 76.90), gold firmer (+11.44 at 2029.96.

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