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US TSYS: Tsys Back Near Morning Highs, Curves Flatter Ahead Key CPI Data

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Still weaker after the bell, Treasuries are back near early session highs as markets consolidate ahead of Wednesday morning's key CPI inflation data for November.
  • Analysts’ forecasts for November CPI imply remarkably steady sequential inflation versus October, with the MNI median and average for core expected to show an unchanged 0.28% M/M. Headline inflation is seen picking up slightly, to 0.27% (median) from 0.24% prior, with both food and energy prices accelerating slightly on a sequential basis. On an annual basis, that means steady Y/Y core (3.3%), with a modest uptick in headline (2.7% vs 2.6%).
  • The Mar'25 10Y contract trades 111-00 last (-5.5) vs. midmorning high of 111-00, 10Y yield +.0194 at 4.2205%. Curves reversed early steepening (2s10s -.333 at 7.129), partially due to incoming corporate and Tsy issuance and after large 2Y/30Y ultra bond flattener blocked in the first half: (-39,000 TUH5 103-03, sell through 103-03.5 post time bid vs. +7,500 WNH5 126-17, post time bid; appr DV01 $1.5M).
  • Issuance factor: lackluster $58B 3Y note auction (91282CMB4) draws 4.117% high yield vs. 4.115% WI; 2.58x bid-to-cover vs. 2.60x prior, direct bidder take-up rebounds off prior low of 9.62% to 20.71%. Corporate issuance: Arthur J Gallagher $5B 5-part issuance is the largest since Conoco-Phillips issued $5.2B debt on November 25.
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  • Still weaker after the bell, Treasuries are back near early session highs as markets consolidate ahead of Wednesday morning's key CPI inflation data for November.
  • Analysts’ forecasts for November CPI imply remarkably steady sequential inflation versus October, with the MNI median and average for core expected to show an unchanged 0.28% M/M. Headline inflation is seen picking up slightly, to 0.27% (median) from 0.24% prior, with both food and energy prices accelerating slightly on a sequential basis. On an annual basis, that means steady Y/Y core (3.3%), with a modest uptick in headline (2.7% vs 2.6%).
  • The Mar'25 10Y contract trades 111-00 last (-5.5) vs. midmorning high of 111-00, 10Y yield +.0194 at 4.2205%. Curves reversed early steepening (2s10s -.333 at 7.129), partially due to incoming corporate and Tsy issuance and after large 2Y/30Y ultra bond flattener blocked in the first half: (-39,000 TUH5 103-03, sell through 103-03.5 post time bid vs. +7,500 WNH5 126-17, post time bid; appr DV01 $1.5M).
  • Issuance factor: lackluster $58B 3Y note auction (91282CMB4) draws 4.117% high yield vs. 4.115% WI; 2.58x bid-to-cover vs. 2.60x prior, direct bidder take-up rebounds off prior low of 9.62% to 20.71%. Corporate issuance: Arthur J Gallagher $5B 5-part issuance is the largest since Conoco-Phillips issued $5.2B debt on November 25.