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US TSYS: Tsys Futures Close Slightly Lower, Retail Sales Later

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys futures ended Monday little changed after early gains were pared during US morning session, with momentum from a couple of block sales of the UXY contract. Stronger-than-expected preliminary December Services PMIs applied downside pressure on Tsys, headlines that there had been some progress in stopping the war in Ukraine, saw futures edge lower,  TU closed -0-00+ at 102-27¾ and TY closed -0-00+ at 109-27+
  • In Treasury options, demand emerged for upside protection, including trades targeting a 10-year yield drop to around 4% by the end of January. While in fed funds futures, larger flows were skewed toward buys ahead of Wednesday’s Fed interest-rate decision. 
  • Cash tsys saw a slight flattening move, with yields closing +0.5bps to 1bps lower. The 2yr closed +0.4bps at 4.249%, the 10yr closed unchanged at 4.397%. The 2s10s flattened 0.5bps at 14.352, while the 2s20s closed -1.3bps at 41.885.
  • The MNI Markets Team's Fed analyst preview, as well as our Policy Team's Sources article out today, point to expectations that the FOMC will signal 3 25bp cuts in 2025 via its Dot Plot, compared with 4 25bp cuts envisaged in the last set of forecasts in September.
  • later today we have Retail Sales & Industrial Production. 
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  • Tsys futures ended Monday little changed after early gains were pared during US morning session, with momentum from a couple of block sales of the UXY contract. Stronger-than-expected preliminary December Services PMIs applied downside pressure on Tsys, headlines that there had been some progress in stopping the war in Ukraine, saw futures edge lower,  TU closed -0-00+ at 102-27¾ and TY closed -0-00+ at 109-27+
  • In Treasury options, demand emerged for upside protection, including trades targeting a 10-year yield drop to around 4% by the end of January. While in fed funds futures, larger flows were skewed toward buys ahead of Wednesday’s Fed interest-rate decision. 
  • Cash tsys saw a slight flattening move, with yields closing +0.5bps to 1bps lower. The 2yr closed +0.4bps at 4.249%, the 10yr closed unchanged at 4.397%. The 2s10s flattened 0.5bps at 14.352, while the 2s20s closed -1.3bps at 41.885.
  • The MNI Markets Team's Fed analyst preview, as well as our Policy Team's Sources article out today, point to expectations that the FOMC will signal 3 25bp cuts in 2025 via its Dot Plot, compared with 4 25bp cuts envisaged in the last set of forecasts in September.
  • later today we have Retail Sales & Industrial Production.