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Markets Sensitive To Omicron Spread


Ringgit Slips In Holiday-Thinned Trade


Another, Modest, Omicron Bid Kicks In

Traders set shorts into 1pm ET $12B....>

US TSYS/TIPS: Traders set shorts into 1pm ET $12B 10Y TIPS reopening; WI 10Y
TIPS cheapened: yield peaked for day around 0.428% at 8:16 am ET, which drew in
dip buyers; it recently was 0.415%. Natwest analysts noted "last CPI" was
"buoying TIPs but our early call is for a pullback in inflation next month. So
we do not want to chase it here."
- BMO's Aaron Kohli said "Fedspeak next wk will only make the mkt" take more
note of "Fed's hawkish reaction function. We cld get some lift in breakevens
from political headlines suggesting an Obamacare repeal (and increased odds of a
tax cut), but we'd fade such optimism." He cited auction stats "biased slightly
to weakness with 4 of the last 6 Sep. auctions tailing an average of 2.1bp."
- Kohli adds TIPS index extension at mo-end "essentially flat at 0.02 yrs and
shldn't bring in much structural demand. Breakevens are showing signs of turning
decidedly lower with 5-year breakevens failing at elevated levels, and 10s
having some difficulty at 1.88. We could easily correct to much lower levels if
CPI next month is soft again. That would make the August print appear the
aberration rather than the weak prints before it."