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US TSYS: Tsys Futures Steady Ahead Of FOMC Later

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • It has been another very quiet Asian session for US tsys, futures are little changed, volumes are well below recent averages. TU +00¼ and 102-28⅛, while TY is trading unchanged at 109-29.
  • A bearish short-term theme in tsys futures remains intact despite Tuesday’s bounce. It is still possible that the latest pullback is a correction. Initial resistance for TY to watch is 110-19+, the 20-day EMA. A break would highlight an early bullish development. For bears, 109-22, 76.4% of the Nov 15 - Dec 6 upleg, has been pierced. A continuation lower would expose 109-02+, the Nov 15 low and key support.
  • Options activity suggests rising yields, with expectations that the 10yr yield could hit 5% in Q1, driven by persistent core inflation and a higher neutral rate. T. Rowe Price have recently raised the chances the 10yr may hit 6%, citing higher budget deficits as Trump cuts taxes, the last time the 10yr hit 6% was back in 2000. Franklin Templeton & JPM Asset Management has recently stated they see the 10yr at 5%, while ING Group see the 10yr between 5-5.5% next year.
  • Cash tsys curves are trading slightly steeper today with yields 1bps to 1.5bps lower across the curve. The 2yr is currently -1.3bps at 4.232%, while 10yr -1.2bps at 4.387%.
  • Focus is now on tonight's FOMC rate decision, it is wildly expected there will be a 25bps cut, see MNI's Fed Preview ( here )
  • Fed fund futures are currently pricing in a 95% chance of a 25bps cut today, with the next full cut not priced in until June 2025 (56.5bps), looking further out the curve the market has priced in a cumulative 72.6bps of cuts through to December 2025.
  • Ahead of FOMC tonight we have MBA Mortgage Applications, Housing Starts & Building Permits
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  • It has been another very quiet Asian session for US tsys, futures are little changed, volumes are well below recent averages. TU +00¼ and 102-28⅛, while TY is trading unchanged at 109-29.
  • A bearish short-term theme in tsys futures remains intact despite Tuesday’s bounce. It is still possible that the latest pullback is a correction. Initial resistance for TY to watch is 110-19+, the 20-day EMA. A break would highlight an early bullish development. For bears, 109-22, 76.4% of the Nov 15 - Dec 6 upleg, has been pierced. A continuation lower would expose 109-02+, the Nov 15 low and key support.
  • Options activity suggests rising yields, with expectations that the 10yr yield could hit 5% in Q1, driven by persistent core inflation and a higher neutral rate. T. Rowe Price have recently raised the chances the 10yr may hit 6%, citing higher budget deficits as Trump cuts taxes, the last time the 10yr hit 6% was back in 2000. Franklin Templeton & JPM Asset Management has recently stated they see the 10yr at 5%, while ING Group see the 10yr between 5-5.5% next year.
  • Cash tsys curves are trading slightly steeper today with yields 1bps to 1.5bps lower across the curve. The 2yr is currently -1.3bps at 4.232%, while 10yr -1.2bps at 4.387%.
  • Focus is now on tonight's FOMC rate decision, it is wildly expected there will be a 25bps cut, see MNI's Fed Preview ( here )
  • Fed fund futures are currently pricing in a 95% chance of a 25bps cut today, with the next full cut not priced in until June 2025 (56.5bps), looking further out the curve the market has priced in a cumulative 72.6bps of cuts through to December 2025.
  • Ahead of FOMC tonight we have MBA Mortgage Applications, Housing Starts & Building Permits