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Treasuries Pare Two Day Rally Ahead Of Data, 7Y Supply

  • Cash Tsys see new lows across the curves with cheapening pressure through European hours. There was no obvious trigger to initial moves, also seen cross asset with equities moving higher, but potential downward pressure at the margin after a report from the IMF suggested a number of options for the BoJ including raising the 10-year target or shortening the yield curve target as options.
  • 2YY +2.3bps at 4.148%, 5YY +4.3bps at 3.569%, 10YY +4.2bps at 3.484% and 30YY +4.3bps at 3.636%.
  • TYH3 trades 5+ ticks lower at 114-31 just off session lows of 114-29, holding above close support at the 20-day EMA of 114-16 and then 114-13+ (Jan 24 low). The latest pullback is considered corrective with the medium-term trend condition seen bullish – resistance at 115-21 (Jan 20 high).
  • Data: GDP/Core PCE in the Q4 advance is in focus, but it hits along with durable goods, international trade, inventories and weekly jobless claims all at 0830ET. Followed by new home sales (1000ET) and KC Fed mfg (1100ET).
  • Bond issuance: US Tsy $35B 7Y note (91282CGJ4) auction – 1300ET
  • Bill issuance: US Tsy $75B 4W, $60B 8W bill auctions – 1130ET

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