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Renewed Cheapening With CPI Revisions and U.Mich Ahead

  • Cash Tsys have seen a resumption of cheapening pressure seen after yesterday’s 30Y tail sparked a large sell-off, coming through the European session after a pause through Asia hours with focus on BoJ leadership. It’s part of a broader higher for longer trend that continues as 2023 rate cut expectations are trimmed further.
  • 2YY +3.3bp at 4.515%, 5YY +4.5bp at 3.903%, 10YY +4.6bp at 3.703% and 30YY +3.8bp at 3.773%. The relatively parallel shift across the curve sees 2s10s at -81bps consolidate a pull back off yesterday’s fresh multi-decade lows of -87bps.
  • TYH3 trades 5 ticks lower at 112-28 as it moves off session lows of 112-25. It has pushed through support at both 113-05+ (Feb 7 low) and 112-29 (76.4% retrace of Dec 30 – Jan 19 bull run), opening 112-18+ (Jan 5 low) as it plays on the bear threat seen.
  • Data: CPI SA revisions (0830ET - see here), U.Mich preliminary consumer survey for Feb (1000ET), Monthly budget statement Jan (1400ET)
  • No further issuance after yesterday’s 30Y tail sparked a large sell-off across the curve.

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