Tsys Bear Steeper Ahead Of Housing Data

The Treasury curve has bear steepened overnight in reaction to the BoJ's surprise move to raise the ceiling on 10Y JGB yields by 25bp to 0.50%.

• The 2s10s spread spiked almost 11bp at one point to the least inverted in more than a month (just above -57bp), though the initial move has faded with the spread back to -61.8bp. That's roughly 6bp higher on the session.
• The 2-Yr US yield is up 1.9bps at 4.2743%, 5-Yr is up 5.4bps at 3.768%, 10-Yr is up 7.8bps at 3.6621%, and 30-Yr is up 7.8bps at 3.7129%.
• Fed hike expectations are little changed, though, with an 5.05% terminal rate end seen in May (ie just above a 4.75-5.00% target range), another 55bp from here. 48bp of cuts are seen by end-year.
• The highlight of an otherwise quiet pre-holiday schedule is housing data at 0830ET, following on from Monday's poor NAHB reading.
• Starts and Permits are seen falling again M/M, though at a slower rate than in October.
• Also bearing watching are fiscal developments in Washington, after a $1.66trn omnibus funding package for FY 2023 was released late Monday night, ahead of Friday's deadline to avoid a shutdown.