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Riksbank Hikes 100Bp, BoC, ECB Warn Persistent Inflation Ahead FOMC

US TSYS

Tsys remain heavy after the bell, off late morning lows over after Tsy yields tapped multi-year highs: 2s 3.9877% high (notably earlier - yld curves bear steepening as short end outperforms bonds); 5s at 3.7748% high; 10s at 3.6004% high; 30Y at 3.6123%).

  • CB Headlines ahead Wed's FOMC: BOC Still In 'Ongoing Battle' Against Too-High Inflation, ECB LAGARDE: INFLATION MUCH HIGHER, PERSISTENT THAN ANTICIPATED; Riksbank Hikes 100bps, Sees Peak At 2.5%.
  • Two-way put trade leaning towards better selling as accts unwind near term downside insurance ahead Wed's FOMC policy annc, 75bp hike expected. Summary of Economic Projections at 1400ET followed by Chair Powell presser at 1430ET.
  • Little initial react to mixed data: Housing starts much better than expected at 1.575M vs. 1.460M est (+12.2% MoM vs. +1.0% est) while Building Permits miss target w/ 1.517M units vs. 1.621M est (-10.0% MoM vs. -3.8% est).
  • Block sales in 5s and 10s, curve flattener unwinds exacerbated first half moves, market settling in ahead the $12B 20Y bond auction re-open.
  • Tsy futures continue to bounce off late morning lows after $12B 20Y bond auction re-open (912810TK4) trades through: 3.820% high yield vs. 3.835% WI; 2.65x bid-to-cover vs. last month's 2.30x. Indirect take-up climbs to 75.32% vs. last month's 66.97% high; direct bidder take-up 16.62% vs. 18.32% prior, primary dealer take-up falls to 8.06% vs. 14.71%.
  • Currently, 2-Yr yield is up 2.6bps at 3.9622%, 5-Yr is up 6.9bps at 3.7517%, 10-Yr is up 8.2bps at 3.5729%, and 30-Yr is up 6.6bps at 3.5808%.
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Tsys remain heavy after the bell, off late morning lows over after Tsy yields tapped multi-year highs: 2s 3.9877% high (notably earlier - yld curves bear steepening as short end outperforms bonds); 5s at 3.7748% high; 10s at 3.6004% high; 30Y at 3.6123%).

  • CB Headlines ahead Wed's FOMC: BOC Still In 'Ongoing Battle' Against Too-High Inflation, ECB LAGARDE: INFLATION MUCH HIGHER, PERSISTENT THAN ANTICIPATED; Riksbank Hikes 100bps, Sees Peak At 2.5%.
  • Two-way put trade leaning towards better selling as accts unwind near term downside insurance ahead Wed's FOMC policy annc, 75bp hike expected. Summary of Economic Projections at 1400ET followed by Chair Powell presser at 1430ET.
  • Little initial react to mixed data: Housing starts much better than expected at 1.575M vs. 1.460M est (+12.2% MoM vs. +1.0% est) while Building Permits miss target w/ 1.517M units vs. 1.621M est (-10.0% MoM vs. -3.8% est).
  • Block sales in 5s and 10s, curve flattener unwinds exacerbated first half moves, market settling in ahead the $12B 20Y bond auction re-open.
  • Tsy futures continue to bounce off late morning lows after $12B 20Y bond auction re-open (912810TK4) trades through: 3.820% high yield vs. 3.835% WI; 2.65x bid-to-cover vs. last month's 2.30x. Indirect take-up climbs to 75.32% vs. last month's 66.97% high; direct bidder take-up 16.62% vs. 18.32% prior, primary dealer take-up falls to 8.06% vs. 14.71%.
  • Currently, 2-Yr yield is up 2.6bps at 3.9622%, 5-Yr is up 6.9bps at 3.7517%, 10-Yr is up 8.2bps at 3.5729%, and 30-Yr is up 6.6bps at 3.5808%.