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PCE, Fed's Preferred Inflation Measure Misses the Mark

Rates see-sawed higher Friday, modest two-way action after early data, while chunky two-way flow going into the close saw better month-end selling as futures pared gains slightly.
  • Not exactly unexpected US/China headlines lent a small bid to Tsys pre-open: U.S. PAUSES IPO REGISTRATIONS FOR CHINESE COMPANIES: RTRS.
  • Rates saw some fast two-way flow after PCE came out softer than anticipated (+0.5% vs. 0.6% est; core +0.4% vs. 0.6% est), levels moving off early session highs on moderate volume.
  • StL Fed Bullard first to exit blackout said "MARKETS `VERY MUCH READY FOR A TAPER' TO START IN FALL".
  • Tsys came under late sell pressure in the lead-up to the close, apparently month-end related amid chunky two-way flow as volume jumps appr 200k in TYU to 1.23M after the bell. Bonds off initial lows.
  • Yield curves held mostly flatter all day. The 10YY still inside 1.29 to 1.22% range all week. The 2-Yr yield is down 1.8bps at 0.1859%, 5-Yr is down 3.8bps at 0.6967%, 10-Yr is down 4.2bps at 1.2273%, and 30-Yr is down 3.5bps at 1.8845%.

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