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Mild Losses Pared In Holiday Trading, Fedspeak Ahead

US TSYS
  • Treasuries have slowly pared overnight losses in what had been spillover from EGBs opening lower on higher defense spending prospects.
  • It leaves futures back little changed from Friday’s settle, consolidating the lurch higher on a surprisingly soft retail sales report, amidst unsurprisingly thin volumes on President’s Day (255k).
  • TYH5 trades at 109-07+ (-02+), having peaked on Friday at 109-15+ but not close to testing a bull trigger at 110-00 (Feb 7 high). For bears, support is seen at 108-04 (Feb 12 low).
  • Fed Funds implied rates are as much as 1bp lower on the day amidst holiday trade, with a next cut fully priced in September and 41bp of cuts for 2025.
  • SOFR futures are little changed on the day, outperforming Euribor counterparts which are up to 4 ticks lower in greens and 5 ticks lower in blues on the defense spending theme.
  • Triple Fedspeak ahead despite the holiday:
    • 0930ET - Harker (non-voter, retiring Jun’25) on the economic outlook (text + Q&A)
    • 1020ET - Bowman (voter, hawk) on the economy and regulatory outlook (just text)
    • 1800ET - Waller (voter, increasingly dovish) on the economic outlook (text + Q&A)
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  • Treasuries have slowly pared overnight losses in what had been spillover from EGBs opening lower on higher defense spending prospects.
  • It leaves futures back little changed from Friday’s settle, consolidating the lurch higher on a surprisingly soft retail sales report, amidst unsurprisingly thin volumes on President’s Day (255k).
  • TYH5 trades at 109-07+ (-02+), having peaked on Friday at 109-15+ but not close to testing a bull trigger at 110-00 (Feb 7 high). For bears, support is seen at 108-04 (Feb 12 low).
  • Fed Funds implied rates are as much as 1bp lower on the day amidst holiday trade, with a next cut fully priced in September and 41bp of cuts for 2025.
  • SOFR futures are little changed on the day, outperforming Euribor counterparts which are up to 4 ticks lower in greens and 5 ticks lower in blues on the defense spending theme.
  • Triple Fedspeak ahead despite the holiday:
    • 0930ET - Harker (non-voter, retiring Jun’25) on the economic outlook (text + Q&A)
    • 1020ET - Bowman (voter, hawk) on the economy and regulatory outlook (just text)
    • 1800ET - Waller (voter, increasingly dovish) on the economic outlook (text + Q&A)