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Tight Ranges Ahead Of CPI, 30Y Supply

US TSYS SUMMARY

Tsys are off lows but flat overall in early Tuesday trade, with inflation data taking center stage shortly.

  • Very moderate flattening in the curve thus far, with few macro catalysts overnight and the U.S. CPI report patiently awaited. The 2-Yr yield is up 0.4bps at 0.2308%, 5-Yr is down 0bps at 0.7945%, 10-Yr is down 0.5bps at 1.3594%, and 30-Yr is down 0.9bps at 1.9882%.
  • Sep 10-Yr futures (TY) up 0.5/32 at 133-13.5, on weak volumes (~180k) and within the narrowest of ranges (L: 133-10 / H: 133-13.5)
  • June headline CPI (0830ET/1330BST) slipping to +0.5% M/M vs +0.6% in May (and +4.9% Y/Y vs +5.0 prior), with core falling to +0.4% M/M vs +0.7% in May (though ticking up to a 30-yr high of +4.0% Y/Y vs +3.8% prior). We've put out a few sell-side expectations on our Bullets feed and IB.
  • Apart from CPI, NFIB small biz optimism came in better than expected (102.5 vs 99.5 exp.). Monthly budget statement out at 1400ET.
  • Supply takes focus later in the session: $34B 52-W and $35B 42-day bill auctions at 1130ET, and the $24B 30Y re-open at 1300ET. NY Fed buys ~$6.025B of 4.5-7Y Tsys.
  • In Fed speak, Kashkari, Bostic and Rosengren attend an event on racism and the economy starting 1200ET. WSJ interviewed Bullard but nothing new there (though slightly notable that softer-than-expected recent econ data has not dissuaded him from taper talk / hike by end-2022).

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