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US TSYS: Tsys Curve Flattens Slightly, Nomura Sees 10yr Potentially Reaching 6%

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys are little changed today, futures are trading within Thursday's ranges TU is unchanged at 102-25¾, while TY is -00+ 108-19 holding above the 20-day EMA. Cash tsys curves have flattened throughout the session with the 2yr +0.4bps at 4.232%, while the 10yr is -0.4bps.
  • In tsys flows today, the stand out was a large TY call buyer, 20,000 TYG5 108.75 for '18, there was also a smaller TY call buyer of TYG5 109.5 for '06
  • The 2s10s hit its highest levels since mid 2022 on Tuesday, we now trade about 5bps off those highs at 37.204. While the 2s5s30s Fly has seen it's largest 2-day move in a year, last -29.5bps
  • Nomura economists project 10yr yields could reach 6% this year, citing their relatively low levels compared to inflation and the fiscal deficit. The US faces its worst cyclically adjusted deficit-inflation combination since 1960, compounded by Trump's nationalistic policies, which may exploit the dollar's reserve currency status. With limited scope to reduce the deficit and significant refinancing needs, gross Treasury issuance could hit 17% of GDP.
  • Projected rate cuts through mid-2025 have regained traction after cooling this morning, current lvls vs. Thursday Morning* as follows: Jan'25 steady at -0.7bp, Mar'25 at -8.3bp (-6.3bp), May'25 -14bp (-11.8bp), Jun'25 -24.8bp (-20.4bp), Jul'25 at -28.7bp (-23.7bp).
  • Fed-dated OIS is now pricing in 41.8bp of combined easing for the year vs. 38bp priced Thursday morning.
  • Later today we have Housing Starts, Building Permits, Industrial Production, while the Fed enters their self imposed media Blackout at midnight Friday through January 30
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  • Tsys are little changed today, futures are trading within Thursday's ranges TU is unchanged at 102-25¾, while TY is -00+ 108-19 holding above the 20-day EMA. Cash tsys curves have flattened throughout the session with the 2yr +0.4bps at 4.232%, while the 10yr is -0.4bps.
  • In tsys flows today, the stand out was a large TY call buyer, 20,000 TYG5 108.75 for '18, there was also a smaller TY call buyer of TYG5 109.5 for '06
  • The 2s10s hit its highest levels since mid 2022 on Tuesday, we now trade about 5bps off those highs at 37.204. While the 2s5s30s Fly has seen it's largest 2-day move in a year, last -29.5bps
  • Nomura economists project 10yr yields could reach 6% this year, citing their relatively low levels compared to inflation and the fiscal deficit. The US faces its worst cyclically adjusted deficit-inflation combination since 1960, compounded by Trump's nationalistic policies, which may exploit the dollar's reserve currency status. With limited scope to reduce the deficit and significant refinancing needs, gross Treasury issuance could hit 17% of GDP.
  • Projected rate cuts through mid-2025 have regained traction after cooling this morning, current lvls vs. Thursday Morning* as follows: Jan'25 steady at -0.7bp, Mar'25 at -8.3bp (-6.3bp), May'25 -14bp (-11.8bp), Jun'25 -24.8bp (-20.4bp), Jul'25 at -28.7bp (-23.7bp).
  • Fed-dated OIS is now pricing in 41.8bp of combined easing for the year vs. 38bp priced Thursday morning.
  • Later today we have Housing Starts, Building Permits, Industrial Production, while the Fed enters their self imposed media Blackout at midnight Friday through January 30