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Ticking Higher On Weaker Equities, And Ahead Of 10Y Supply


The Treasury curve has bull flattened overnight Wednesday as equities have retraced. Session's focus is on 10Y supply and Fed communications. The 2-Yr yield is down 0.6bps at 0.2142%, 5-Yr is down 1.4bps at 0.8078%, 10-Yr is down 2.2bps at 1.3512%, and 30-Yr is down 2.8bps at 1.9591%. Dec 10-Yr futures (TY) up 4/32 at 133-04 (L: 132-30.5 / H: 133-06.5).

  • A fairly quiet Asia-Pac session, with most overnight headlines focused on St Louis Fed's Bullard in an FT interview reiterating hawkish stance despite weak August jobs report. Treasuries gained in European trade, as equities sagged (S&P futures fell to September lows just after 0200ET).
  • The primary focus will once again be supply: today is $38B 10Y note auction at 1300ET (also a $30B auction of 119-day bills at 1130ET).
  • A fairly light data schedule, with weekly MBA mortgage applications at 0700ET, July JOLTS at 1000ET, and July consumer credit at1500ET.
  • FOMC speakers scheduled today include NY's Williams at 1310ET and Dallas' Kaplan at 1800ET, and we also get the latest Beige Book at 1400ET.
  • NY Fed buys ~$2.025B of 1-7.5Y TIPS.

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