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US TSYS: Short-End Tsys Outperform As Curve Steepens Following FOMC Minutes

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys futures closed mixed, they initially started on the back foot in a continuation of the bearish price action following last Friday's post-retail sales peak, with developments in Europe  weighing, moves were largely erased over the session with the short-end outperforming after receiving a late boost from the FOMC minutes. According to the minutes, “various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of this event,” referring to the US debt limit needing to be raised or suspended, as per bbg.
  • Treasury futures flows around FOMC minutes included block trades involving 10yr and Ultra Bond contracts consistent with a curve-steepening trade. TU closed +01+ at 102-23⅝, while TY closed +03+ at 109-30+
  • Cash tsys curves steepened, with yields closing flat to 4.5bps higher, the 3yr outperforming. The 2yr closed -3.8bps at 4.268%, while the 10yr closed -1.8bps at 4.533%. The 2s10s closed +2bps at 26bps.
  • The 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January
  • The Fed's Jefferson highlighted that a robust economy and solid labor market allow policymakers to delay further interest rate cuts, maintaining a restrictive monetary policy stance despite a 100 basis point reduction last year. He noted that while most households benefit from increased wealth, some are financially strained with higher credit card use and lower savings, potentially vulnerable to economic shocks as inflation's decline remains uneven.
  • Thursday's schedule includes the Philly Fed manufacturing survey alongside weekly jobless claims, while the highlight of the Fedspeak schedule is St Louis's Musalem.
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  • Tsys futures closed mixed, they initially started on the back foot in a continuation of the bearish price action following last Friday's post-retail sales peak, with developments in Europe  weighing, moves were largely erased over the session with the short-end outperforming after receiving a late boost from the FOMC minutes. According to the minutes, “various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of this event,” referring to the US debt limit needing to be raised or suspended, as per bbg.
  • Treasury futures flows around FOMC minutes included block trades involving 10yr and Ultra Bond contracts consistent with a curve-steepening trade. TU closed +01+ at 102-23⅝, while TY closed +03+ at 109-30+
  • Cash tsys curves steepened, with yields closing flat to 4.5bps higher, the 3yr outperforming. The 2yr closed -3.8bps at 4.268%, while the 10yr closed -1.8bps at 4.533%. The 2s10s closed +2bps at 26bps.
  • The 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January
  • The Fed's Jefferson highlighted that a robust economy and solid labor market allow policymakers to delay further interest rate cuts, maintaining a restrictive monetary policy stance despite a 100 basis point reduction last year. He noted that while most households benefit from increased wealth, some are financially strained with higher credit card use and lower savings, potentially vulnerable to economic shocks as inflation's decline remains uneven.
  • Thursday's schedule includes the Philly Fed manufacturing survey alongside weekly jobless claims, while the highlight of the Fedspeak schedule is St Louis's Musalem.