Treasury Futures Head Lower As CPI Higher Than Expected

Treasury futures had an extremely quiet session prior to CPI on Tuesday, before selling off after the higher-than-expected reading as projected rate cut pricing receded and extended lows after the $39B 10Y re-open sale (91282CJZ5) tailed 1.1bp.

• Jun'24 10Y futures reached a low of 111-02+ before closing the session at 111-05+, and as trading just underway in Asia futures are + 01 to 111-06+
• Looking at technicals, initial supports holds at 111-03+ (20-day EMA), below there 110-21 (Mar 4 low), to the upside, initial resistance is 112-04+ (Mar 8 highs) while above is 112-10+ (61.8% retracement of the Feb 1 - 23 bear leg)
• CPI MoM (0.4% vs. 0.4% est), YoY (3.2% vs. 3.1% est); CPI Ex Food and Energy MoM (0.4% vs. 0.3% est) YoY (3.8% vs. 3.7% est). Meanwhile, Real Avg Hourly Earning YoY (1.1% vs. prior 1.3% (rev), Weekly Earnings YoY (0.5% vs. prior 0.1% (rev).
• Estimated dispersion across 57 items over the entire CPI basket saw relatively limited moderation in February considering the sharp increase in the breadth of inflationary pressure back in January. As such it lends support to that Jan jump for figures that can be noisy from month-to-month.
• Looking ahead: Mortgage Applications and a Treasury bond sale re-open, the main focus is on Thursday's Retail Sales and PPI data.