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US TSYS: Sell-Off Extends, Outperforming EGBs Pre-ECB

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Treasuries have extended yesterday’s second half sell-off and have now easily more than reversed the initially dovish reaction to US CPI across all major tenors.
  • They follow sizeable downward pressure in EGBs where Italian supply has offered an additional headwind. China stimulus plans from the CEWC readout hasn’t had a material impact on Treasuries
  • Away from potential spillover from the ECB decision at 0815ET, today’s focus is firmly on US PPI inflation and weekly jobless claims (see more detail in STIR bullet) before attention turns to the 30Y reopen after a strong 10Y yesterday.
  • Cash yields are 2.1-2.5bp higher with 10s earlier breaching 4.30% (high 4.3023%) for the first time since Nov 26/27.
  • 2s10s is back unchanged on the day at 12bps as it consolidates yesterday’s renewed steepening, off 13.3bps earlier for its steepest since Nov 20.
  • TYH5 has been on and off session lows of 110-16 (-06) for two hours now, on slightly higher cumulative volumes of 270k after particularly weak overnight sessions earlier this week.
  • The recent pullback has extended, coming closer to support at 110-11+ (50% retrace of Nov 15 – Dec 6 bull cycle) after which lies 110-02 (61.8% retrace). Resistance is seen at 111-07 (Dec 11 high).  
  • Data: PPI Inflation Nov (0830ET), Weekly jobless claims (0830ET), Household net worth Q3 (1200ET)
  • Note/bond issuance:US Tsy $22B 30Y Bond reopen - 912810UE6 (1300ET)
  • Bill issuance: US Tsy $80B 4W & $75B 8W bill auctions (1130ET)
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  • Treasuries have extended yesterday’s second half sell-off and have now easily more than reversed the initially dovish reaction to US CPI across all major tenors.
  • They follow sizeable downward pressure in EGBs where Italian supply has offered an additional headwind. China stimulus plans from the CEWC readout hasn’t had a material impact on Treasuries
  • Away from potential spillover from the ECB decision at 0815ET, today’s focus is firmly on US PPI inflation and weekly jobless claims (see more detail in STIR bullet) before attention turns to the 30Y reopen after a strong 10Y yesterday.
  • Cash yields are 2.1-2.5bp higher with 10s earlier breaching 4.30% (high 4.3023%) for the first time since Nov 26/27.
  • 2s10s is back unchanged on the day at 12bps as it consolidates yesterday’s renewed steepening, off 13.3bps earlier for its steepest since Nov 20.
  • TYH5 has been on and off session lows of 110-16 (-06) for two hours now, on slightly higher cumulative volumes of 270k after particularly weak overnight sessions earlier this week.
  • The recent pullback has extended, coming closer to support at 110-11+ (50% retrace of Nov 15 – Dec 6 bull cycle) after which lies 110-02 (61.8% retrace). Resistance is seen at 111-07 (Dec 11 high).  
  • Data: PPI Inflation Nov (0830ET), Weekly jobless claims (0830ET), Household net worth Q3 (1200ET)
  • Note/bond issuance:US Tsy $22B 30Y Bond reopen - 912810UE6 (1300ET)
  • Bill issuance: US Tsy $80B 4W & $75B 8W bill auctions (1130ET)