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PPI Inflation Comes Into Focus, 30Y Auction Later

US TSYS
  • Cash Tsys bull steepen on the day to reverse a bear flattening seen later in yesterday’s US session. The net result is that the majority of yesterday’s initial post-CPI bull steepening is left intact, with 2s10s at -40.5bps having been closer to -50bps prior to CPI, but in doing so is only back to Monday’s levels.
  • The curve remains heavily inverted with still strong CPI pressure despite the latest moderation and FOMC members wanting to see sustained downward pressure whilst currently sticking with prior rate forecasts.
  • 2YY -3.9bps at 3.175%, 5YY -2.4bps at 2.898%, 10YY -1.1bps at 2.764% and 30YY +0.2bps at 3.034% (auction later).
  • TYU2 trades 3 ticks higher at 119-27, well within wide ranges established after both CPI and payrolls releases, with average volumes for this time of year. The trend direction remains up with trendline support at 119-16 (drawn from Jun 16 low) and resistance at 120-29 (Aug 4 high).
  • Data: PPI for July and weekly jobless claims – 0830ET
  • Bond issuance: US Tsy 30Y Bond auction (912810TJ7) – 1300ET
  • Bill issuance: US Tsy $55B 4W, $50B 8W bill auctions – 1130ET
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  • Cash Tsys bull steepen on the day to reverse a bear flattening seen later in yesterday’s US session. The net result is that the majority of yesterday’s initial post-CPI bull steepening is left intact, with 2s10s at -40.5bps having been closer to -50bps prior to CPI, but in doing so is only back to Monday’s levels.
  • The curve remains heavily inverted with still strong CPI pressure despite the latest moderation and FOMC members wanting to see sustained downward pressure whilst currently sticking with prior rate forecasts.
  • 2YY -3.9bps at 3.175%, 5YY -2.4bps at 2.898%, 10YY -1.1bps at 2.764% and 30YY +0.2bps at 3.034% (auction later).
  • TYU2 trades 3 ticks higher at 119-27, well within wide ranges established after both CPI and payrolls releases, with average volumes for this time of year. The trend direction remains up with trendline support at 119-16 (drawn from Jun 16 low) and resistance at 120-29 (Aug 4 high).
  • Data: PPI for July and weekly jobless claims – 0830ET
  • Bond issuance: US Tsy 30Y Bond auction (912810TJ7) – 1300ET
  • Bill issuance: US Tsy $55B 4W, $50B 8W bill auctions – 1130ET