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Post-Fed Beige Book React

US TSYS
  • Treasury futures are drifting in modestly higher territory - at/near late session highs after the the Fed released the Beige Book for July. Expectations of slower economic growth tied to election uncertainty, domestic policy, inflation and geopolitical uncertainty.
  • TYU4 trades 111-14 last (+3.5) session high, and testing initial technical resistance of 111-13+/17+ (High Jul 16 / 1.382 of Apr 25-May 16-29 swing), next level at 111-31 (1.382 proj of the Apr 25 - May 16 - 29 price swing).
  • Curves holding flatter profile with short end lagging late session gains, 2s10s -2.237 at -28.407. As a result, projected rate cut pricing into year end slightly cooler vs. late Tuesday levels (*): July'24 at -6.5% w/ cumulative at -1.6bp at 5.313%, Sep'24 cumulative -25.7bp (-26.6bp), Nov'24 cumulative -41.1bp (-42.9bp), Dec'24 -63.6bp (-65.4bp).

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