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Off Highs Ahead Of Prelim PMIs

US TSYS
  • Cash Tsys have seen a more concerted move off highs, although it just about keeps to the belly-led rally narrative in spillover from softer European PMIs, ahead of the US preliminary PMIs shortly at 0945ET.
  • 2s underperform ahead of 2Y supply and with relatively sticky Fed implied rates ahead of Wednesday’s decision, driving a modest twist flattening as things stand with 2YY +0.5bps and 5YY -2.6bps.
  • TYU3 has retreated to 112-12+ off a high of 112-17+ but remains within Thursday’s wide range. The recent pullback appears to be a correction and could see support at 112-00 (Jul 20 low), whilst a key resistance point is seen at 113-06 (50-day EMA). Volumes are notably light at a cumulative 425k.

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