Tsys Futures Push Higher, Fed Rhetoric Cools Slightly

TYH4 is trading at 110-08+, - 01 from NY closing levels.

Treasury futures were firmer during the US session on Tuesday, as the market digested Fed speakers, who were broadly in line with Powell's views.

• Mar'24 10Y futures tested 110-24 as the US trading session got underway, but only moved higher throughout the day, closing at 111-09, initial technical resistance is 111-21 (20-day EMA), while support remains 110.-26 (Jan 19th lows).
• Fed speakers were the main focus with Cleveland Fed Mester outlook comments "POLICY IS IN A GOOD PLACE, MISTAKE TO CUT RATE TOO SOON .. CAN'T COUNT AS MUCH ON SUPPLY SIDE TO LOWER INFLATION" was largely in-line with Chairman Powell comments, while MN Fed President Kashkari also sounded more placative of late.
• In turn, projected rate cut pricing gained slightly by Tuesday's close: March 2024 chance of 25bp rate cut currently -20.3% vs. -17.4% this morning w/ cumulative of -5.1bp at 5.270%, May 2024 at -61.2% vs. -57% w/ cumulative -20.4bp at 5.118%, while June 2024 back to -89.2% from -83.8% (105% pre-NFP for comparison) w/ cumulative -42.7bp at 4.895%. Fed terminal at 5.325% in Feb'24.
• Data Tonight: Continued Focus on Fed Speakers, Mortgage Applications, Trade Balance & 10Y Sale