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Modestly Bear Steeper With 3Y Supply Headlining

US TSYS
  • Cash Tsys trade 0-1.5bp cheaper, bear steepening with 2s10s at -33bps (+1bp) nudging towards recent highs, with the sell-off generally a modest extension of yesterday’s second half move off highs.
  • The sizeable level of global sovereign & IG duration on offer today is garnering most of the focus during early London trade, with little in the way of meaningful headline flow observed and with Tsys shrugging off softer than expected German industrial production for its sixth consecutive monthly decline.
  • TYH4 at 111-24+ is off earlier lows of 111-22+ but still firmly within yesterday’s range, whilst volumes are on the subdued side at 260k. The corrective cycle is seen remaining in play, with support at 111-06+ (Jan 5 low) and resistance at 112-19 (Jan 4 high).
  • Data: Trade balance Nov (0830ET)
  • Fedspeak: Fed VC Barr discussion on bank regulation, no text (1200ET)
  • Note/bond issuance: US Tsy $52B 3Y Note auction (91282CJT9) (1300ET)
  • Bill issuance: US Tsy $70B 42 Day CMB auction (1130ET)

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