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Tsys Defrosting, 10Y Yield Back Over 4%

US TSYS
  • Cash Tsys running weaker as US markets return from Martin Luther King holiday, curves mildly steeper (2Y10Y +.292 at -20.430, hovering near post-PPI high and steepest level since October). Tsy 10Y yield back above 4% at 4.0087% (+.0697).
  • March'24 10Y futures just off recent overnight low of 112-05 at 112-06.5 (-12.5), putting the contract back at Friday's pre-PPI levels and still well above initial technical support of 111-06+ (Low Jan 05) followed by key pivot support at 111-01+, the 50-day EMA.
  • Projected rate cuts cool slightly but markets still targeting May as first rate cut.
  • US Treasury supply resumes with $75B 13W and $68B 26W bill auctions at 1130ET, followed by $70B 42D CMB bill auction at 1300ET. Scheduled Fed speaker on tap: Fed Gov Chris Waller moderated discussion Brookings Inst, live-streamed.
  • Economic data limited to Empire Manufacturing at 0830ET.
  • Markets will be keeping eye on headlines from the World Economic Forum in Davos, resumption of corporate earnings with GS, MS and PNC today.

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