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New Inverted Yld Curve Lows

US TSYS

Tsys quietly drifted back near midmorning highs at the bell (30YY taps 3.4091% low), new 40Y lows for yld curves (2s10s -85.240) on an otherwise quiet second half. Incidentally, yld curves steepened briefly followed by large duration neutral curve flattener Blocked at 0845:00ET: -19,077 FVH3, 108-31.5 sell through 109-01 post-time bid vs. +8,506 UXYH3 121-15.5, post-time offer.

  • Tsys bounced off early session lows following lower than expected Q3 Unit Labor cost figure climbed +2.4% vs. +3.1% est, then gap bid following Russia Pres Putin warning the "threat of nuclear war rising".
  • Knee-jerk bid saw 30YY fall to 3.4239% low quickly reversed to near opening range while yld curves receded to lowest levels since late 1981 - signaling uncertainty over potential for economic recession in 2023.
  • Look ahead: Thu data limited to weekly claims, main focus on Fri's PPI at 0830ET:
    • PPI Final Demand MoM (0.2%, 0.2%); YoY (8.0%, 7.2%)
    • PPI Ex Food and Energy MoM (0.0%, 0.2%); YoY (6.7%, 5.9%)
    • PPI Ex Food, Energy, Trade MoM (0.2%, 0.1%); YoY (5.4%, 4.7%)
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