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Tsys Chip Away At Yesterday’s Sell-Off Ahead Of Fedspeak, Beige Book

US TSYS
  • Cash Tsys have rallied 2-4bps after yesterday’s sizeable cheapening, with moves led by the front-end as Fed hike expectations are chipped at, which sees approximately half of yesterday’s move unwound for the 2Y but much less than that further out after the 30YY touched eight-year highs. The long end lags larger rallies in European core FI, with heavy corporate issuance likely to continue to help pressure Treasuries this week.
  • 2YY -3.7bps at 3.466%, 5YY -2.6bps at 3.426%, 10YY -2.3bps at 3.326% and 30YY -2.1bps at 3.480%.
  • TYZ2 trades just 2+ ticks higher at 115-21+ having yesterday cleared the bear trigger of 115-23. Initial support is formed at the intraday low of 115-13+ after which it would open 114-26 ()Jun 16 low).
  • Data/releases: The Fed Beige Book leads with data limited to weekly MBA mortgage data and the final trade balance for July.
  • Fedspeak: VC Brainard and Mester likely dominate although also see Barr (VC Supervision) on the financial system – all permanent/’22 voters, and a repeat appearance from Barkin (’24 voter).
  • Bill issuance: $30B 119-Day CMB auction
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  • Cash Tsys have rallied 2-4bps after yesterday’s sizeable cheapening, with moves led by the front-end as Fed hike expectations are chipped at, which sees approximately half of yesterday’s move unwound for the 2Y but much less than that further out after the 30YY touched eight-year highs. The long end lags larger rallies in European core FI, with heavy corporate issuance likely to continue to help pressure Treasuries this week.
  • 2YY -3.7bps at 3.466%, 5YY -2.6bps at 3.426%, 10YY -2.3bps at 3.326% and 30YY -2.1bps at 3.480%.
  • TYZ2 trades just 2+ ticks higher at 115-21+ having yesterday cleared the bear trigger of 115-23. Initial support is formed at the intraday low of 115-13+ after which it would open 114-26 ()Jun 16 low).
  • Data/releases: The Fed Beige Book leads with data limited to weekly MBA mortgage data and the final trade balance for July.
  • Fedspeak: VC Brainard and Mester likely dominate although also see Barr (VC Supervision) on the financial system – all permanent/’22 voters, and a repeat appearance from Barkin (’24 voter).
  • Bill issuance: $30B 119-Day CMB auction