Free Trial
AUSSIE BONDS

RBA Day, 50 Seems The Most Viable Option

AUSSIE 10-YEAR TECHS

(U2) More Stable But Still Fragile Longer Term

US TSYS

A Modest Downtick On Independence Day

AUD

AUD Extends Rebound

AUSSIE 3-YEAR TECHS

(U2) Near-Term Bounce Accelerates

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Stagflation Worry Remains In The Air

US TSYS

A flat start for TYM2, after the contract finished Wednesday a touch shy of its London/NY crossover peak, last dealing -0-02 at 119-06+.

  • To recap, cash Tsy trade saw twist flattening on Wednesday as the curve pivoted around 5s. 2s provided the weakest point on the curve, cheapening by 2.5bp come the bell, while 10+-Year paper was 7-8bp richer.
  • Rallying crude oil futures and the twist flattening of the Tsy curve, coupled with weakness in equity markets, pointed to stagflation fear being in the driving seat on Wednesday.
  • Breakevens were 8-15bp wider on the session, withs 2 leading that dynamic.
  • This came as U.S. CPI data for April revealed a smaller than expected moderation in both headline and core Y/Y terms, in addition to larger than expected M/M increases.
  • The CPI data resulted in immediate pressure across the curve, although losses were then unwound to varying degrees as we moved through the session and the aforementioned stagflation fear came to the fore, resulting in the previously outlined twist flattening of the curve.
  • A late block buy in FVM2 futures (+20,105) provided some extra support for the belly into the bell.
  • 10-Year Tsy supply saw a 1.4bp tail, with the intraday volatility keeping some prospective bidders sidelined. It is worth noting that the demand metrics were firmer than the pricing side, with the cover ratio incrementally higher vs. prev., moving in line with the recent average, while dealer takedown slid back below its own recent average.
  • Note that there isn’t anything in the way of notable tier 1 data releases slated for Asia-Pac hours. PPI & weekly claims data are due during NY hours, in addition to 30-Year Tsy supply.
279 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

A flat start for TYM2, after the contract finished Wednesday a touch shy of its London/NY crossover peak, last dealing -0-02 at 119-06+.

  • To recap, cash Tsy trade saw twist flattening on Wednesday as the curve pivoted around 5s. 2s provided the weakest point on the curve, cheapening by 2.5bp come the bell, while 10+-Year paper was 7-8bp richer.
  • Rallying crude oil futures and the twist flattening of the Tsy curve, coupled with weakness in equity markets, pointed to stagflation fear being in the driving seat on Wednesday.
  • Breakevens were 8-15bp wider on the session, withs 2 leading that dynamic.
  • This came as U.S. CPI data for April revealed a smaller than expected moderation in both headline and core Y/Y terms, in addition to larger than expected M/M increases.
  • The CPI data resulted in immediate pressure across the curve, although losses were then unwound to varying degrees as we moved through the session and the aforementioned stagflation fear came to the fore, resulting in the previously outlined twist flattening of the curve.
  • A late block buy in FVM2 futures (+20,105) provided some extra support for the belly into the bell.
  • 10-Year Tsy supply saw a 1.4bp tail, with the intraday volatility keeping some prospective bidders sidelined. It is worth noting that the demand metrics were firmer than the pricing side, with the cover ratio incrementally higher vs. prev., moving in line with the recent average, while dealer takedown slid back below its own recent average.
  • Note that there isn’t anything in the way of notable tier 1 data releases slated for Asia-Pac hours. PPI & weekly claims data are due during NY hours, in addition to 30-Year Tsy supply.