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Post Auction Rally Extended Ahead Of CPI, Further Supply

  • Cash Tsys trade 2.5-4.55bp richer, extending yesterday’s rally seen after double note issuance, which despite both 3s and 10s tailing appeared to be met by investors happy to re-enter longs at more favorable levels after the sell-off instigated by an on balance stronger than expected payrolls report.
  • TYH4 at 110-20+ (+10) sits just off the day’s high of 110-22. The trend structure remains bullish, with resistance at the bull trigger of 111-09+ (Dec 7 high) after which lies 111-19 (Fibo projection of Oct- Nov price swings).
  • CPI clearly headlines today (preview), before likely some further attention on supply, this time at the very long end, but all with tomorrow’s FOMC decision on the horizon (preview).
  • Data: CPI Nov (0830ET), Real Av Earnings Nov (0830ET), Mthly Budget Statement Nov (1400ET)
  • Note/bond issuance: US Tsy $21B 30Y Bond auction R/O (912810TV0) – 1300ET
  • Bill issuance: US Tsy $70B 42D bill CMB auction – 1130ET

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