Still Under Pressure, 4.45% Nears In 10s

Early London/European reaction to Asia-Pac price action weighed on Tsys, with a second round of selling seen in recent trade.

• TYM4 last -0-15 at 109-06, with fresh session lows (109-05) hit in recent trade.
• TY volume runs comfortably above average for this time of the day, at ~358K lots.
• Next tech support comes in at 109-00, although there may be some interest at the 4.45% equivalent for 10-Year yields (109-04+), which is just below the base of today’s range.
• Cash Tsy yields are 2.5-4.0bp higher, intermediates lead the sell off.
• 10s have printed a high of 4.448% so far, the highest level seen since late Nov.
• Continued reassessment of the Fed rate path following Friday’s labor market report keeps the space under pressure.
• FOMC-dated OIS now shows ~13bp of cuts through June (~52% odds of a cut), with ~62bp of cuts priced through the end of ’24.
• There wasn’t any meaningful escalation in geopolitical tensions over the weekend, after Middle East worry was evident late Friday. That will also be factoring into the sell off.
• NY Fed inflation expectations data and comments from Fed dove Goolsbee are due today.
• Wednesday’s CPI is the next key data release. FOMC meeting minutes are also due Wednesday.