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Treasuries Dip With Risk-On Shift

US TSYS
  • Cash Tsys have dipped this morning on an improvement in risk-on sentiment overnight, helped by a suggestion that talks between Biden and Manchin had been more constructive than first feared with further discussion due in the new year.
  • 2Y yields are +0.8bps at 0.640%, 5Y +0.8bps at 1.175%, 10Y +1.5bps at 1.438% and 30Y +1.2bps at 1.863%. Following yesterday’s bull steepening, 2s10s spread is up 5.5bp at 79.5bps and back towards the upper end of the post-FOMC range.
  • TYH2 futures are down -0-03+ at 131-01+ on mild volumes, a change from yesterday’s heavy start. First support is seen at 130-17+, the 20-day EMA, whilst initial resistance is 131-19, yesterday’s high.
  • Biden speaks on Omicron developments at 1430ET.
  • No Fedspeak today and data limited to the current account for Q3 at 0830ET.
  • NY Fed buy-op: TIPS 7.5Y-30Y, appr $0.925B vs. $1.075B prior (1030ET).
  • US Tsy $20B 20Y Bond auction re-open (1300ET).

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