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Partial Retracement Of Last Week’s Recession-Focused Rally

US TSYS
  • Treasuries have more closely followed the risk-on moves implied in FX rather than falling equities, where tech companies appear to weigh on performance with Nasdaq seeing larger declines than SPX.
  • Accelerated cheapening in the front-end, despite a brief pause for a solid 2Y auction stopping through 0.6bps with reasonable internals, has seen parallel shift higher in the yield curve (2YY +6.3bps, 10YY +6.6bps) from the early session bear steepening as both breakevens and real yields increase.
  • That only sees a partial reversal of Friday’s rally, with yields still some 20bps below mid-last week levels before growth indicators started to roll heavily.
  • Plenty of growth-related triggers tomorrow, with a heavy earnings week (50% of S&P market cap) beginning in earnest, the Richmond Fed manufacturing and Conf. Board consumer surveys plus the $46B 5Y auction.
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  • Treasuries have more closely followed the risk-on moves implied in FX rather than falling equities, where tech companies appear to weigh on performance with Nasdaq seeing larger declines than SPX.
  • Accelerated cheapening in the front-end, despite a brief pause for a solid 2Y auction stopping through 0.6bps with reasonable internals, has seen parallel shift higher in the yield curve (2YY +6.3bps, 10YY +6.6bps) from the early session bear steepening as both breakevens and real yields increase.
  • That only sees a partial reversal of Friday’s rally, with yields still some 20bps below mid-last week levels before growth indicators started to roll heavily.
  • Plenty of growth-related triggers tomorrow, with a heavy earnings week (50% of S&P market cap) beginning in earnest, the Richmond Fed manufacturing and Conf. Board consumer surveys plus the $46B 5Y auction.