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Mildly Richer Ahead Of CPI, Fedspeak and 10Y Re-Open

  • Cash Tsys sit 1-2.5bp richer through 2-10Y tenors, with recent underperformance from 30s as the day’s gains in a sharp move back to the 4% mark. The day’s rally is led by belly with 5s 11bp richer on the 2-/5-/10-year fly week to date. Treasuries lag the rally seen in Gilts and trade more in line with EU FI, but have struggled to push much further on ahead of US CPI (full preview here).
  • 2YY -1.2bp at 4.860%, 5YY -2.6bp at 4.202%, 10YY -1.8bp at 3.952%, 30YY -0.1bp at 4.006%.
  • TYU3 trades 7+ ticks higher at 111-16 off a high of 111-18+ having cleared yesterday’s range, with subdued volumes of 230k. The trend outlook remains bearish with an ultimate focus on the bear trigger at 110-05 (Jul 6 low), but in the interim further upside could be seen with resistance at the 20-day EMA of 112-09.
  • Data: CPI Jun (0830ET), Real average earning Jun (0830ET) plus weekly MBA mortgage data (0700ET)
  • Fed: Barkin (0830ET), Kashkari (0945ET), Bostic (1300ET) and Mester (1600ET), plus Fed Beige Book (1400ET) and Senate Banking Committee Hearing on Fed Board nominations (1400ET).
  • Note/bond issuance: US Tsy $32B 10Y Note auction re-open (91282CHC8) – 1300ET
  • Bill issuance: US Tsy 17W Bill auction – 1130ET

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