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US TSYS: Tsys Futures Close Slightly Higher, Trump Says Tariffs Are Coming

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys futures closed slightly higher, with the long-end outperforming, although we did close off session highs made in the first half of the US session. Trump again threatened Canada and Mexico with 25% tariffs, sparking a surge in the USD, while also mentioning China will likely face tariffs. TU closed +0-01⅝ at 102-28⅝, while TY closed +0-09 at 109-07+.
  • In tsys options there was continued demand for protection against a selloff, with one play targeting a US 10yr yield of 4.85%, while in SOFR options demand for rate hike structures appeared in June 2025 contracts
  • Cash tsys yields closed lower, with the curve flattening slightly. The 2yr closed -06bps at 4.207%, while the 10yr closed -1.2bps at 4.516%. The 2s10s fell 0.5bps, while the 2s10s saw the largest drop closing 1bps lower at 60.123.
  • The main catalysts during US session were jobless claims and, concurrently, initial estimate of 4Q GDP. Initial claims in the Jan 25 week fell 16k to a 3-week low of 207k, defying forecasts of a 2k rise to 225k. This was the largest drop in SA initial claims in 6 weeks, and largely reverses the previous two weeks' uptick.
  • Q4 GDP growth missed expectations at 2.3% Q/Q annualized (vs 2.6% survey, 3.1% prior, though exactly in line with yesterday's Atlanta Fed GDP Nowcast), the weakest in 3 quarters, with the headline PCE price deflator was on the soft side (2.2% vs 2.5% expected).
  • Fed-dated OIS have ~3bp of cuts priced in for March meeting and just short of 50bp by year-end
  • Later today we have Personal Income & Spending, PCE Price Index & MNI Chicago PMI
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  • Tsys futures closed slightly higher, with the long-end outperforming, although we did close off session highs made in the first half of the US session. Trump again threatened Canada and Mexico with 25% tariffs, sparking a surge in the USD, while also mentioning China will likely face tariffs. TU closed +0-01⅝ at 102-28⅝, while TY closed +0-09 at 109-07+.
  • In tsys options there was continued demand for protection against a selloff, with one play targeting a US 10yr yield of 4.85%, while in SOFR options demand for rate hike structures appeared in June 2025 contracts
  • Cash tsys yields closed lower, with the curve flattening slightly. The 2yr closed -06bps at 4.207%, while the 10yr closed -1.2bps at 4.516%. The 2s10s fell 0.5bps, while the 2s10s saw the largest drop closing 1bps lower at 60.123.
  • The main catalysts during US session were jobless claims and, concurrently, initial estimate of 4Q GDP. Initial claims in the Jan 25 week fell 16k to a 3-week low of 207k, defying forecasts of a 2k rise to 225k. This was the largest drop in SA initial claims in 6 weeks, and largely reverses the previous two weeks' uptick.
  • Q4 GDP growth missed expectations at 2.3% Q/Q annualized (vs 2.6% survey, 3.1% prior, though exactly in line with yesterday's Atlanta Fed GDP Nowcast), the weakest in 3 quarters, with the headline PCE price deflator was on the soft side (2.2% vs 2.5% expected).
  • Fed-dated OIS have ~3bp of cuts priced in for March meeting and just short of 50bp by year-end
  • Later today we have Personal Income & Spending, PCE Price Index & MNI Chicago PMI