Stabilising But Still Cheaper

Tsys have traded on the defensive, with TYH4 showing as low as 112-00 thus far.

• The contract last prints -0-06+ at 112-03, dealing within the lower half of its 0-12 range.
• $ supply from Indonesia & Hungary added to the supply-induced pressure seen on Tuesday.
• Initial technical support comes in just below today’s low, in the form of the Dec 14 base (111-31+). A breach there would expose the nearby 20-DMA.
• The recently flagged 4K lift in TY futures has helped the space find a bit of a base, along with a move lower in crude oil futures.
• Cash Tsys yields are 3.0-4.5bp higher on the day.
• 10s couldn’t challenge/breach 4.00% during the early cheapening, printing a high of 3.986%.
• FOMC-dated OIS shows ~143bp of cuts through ’24, back from pre-Christmas dovish extremes which showed ~160bp of easing through this year. 20.5bp of cuts are priced through the March ’24 FOMC.
• The ISM manufacturing survey, JOLTS job openings and Dec FOMC meeting minutes will cross today.
• Details of the FOMC minutes will be combed and may receive heightened interest given the market follow through stemming from the dovish pivot deployed at that gathering. As noted above, market pricing re: the Fed’s rate path has rebounded from dovish extremes in recent sessions.
• Also note that we will get the first round of ’24 Fedspeak from Richmond Fed President Barkin (’24 voter).