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Tsys in Holding Pattern Ahead CPI/PPI

US TSYS
  • Tsys remain mildly weaker after the bell, near the top end of a narrow range after another quiet data session with markets in a holding pattern ahead CPI/PPI on Thursday/Friday.
  • Little reaction in rates following this morning's lower than expected Trade Balance (-$63.2B vs -$64.9B est). Rates appeared to follow EGBs as they drifted off lows following a number of EUR IG supply unwinds.
  • Projected rate cuts for early 2024 recovered slightly after unwinding Mon's gains: January 2024 cumulative -1.1bp at 5.318%, March 2024 chance of rate cut -62.0% vs. -57.2% this morning w/ cumulative of -16.6bp at 5.163%, May 2024 chance of cut 86.8% vs. 85.6% this morning, cumulative -38.3bp at 4.946%. Fed terminal at 5.3275% in Jan'24.
  • Current TYH4 at 111-29 (-4.5), well inside technicals: Treasuries remain in a short-term corrective cycle. Price has traded through the 20-day EMA and the breach of this average, does suggest potential for a continuation lower near-term. The next key support lies at 110-25+, the 50-day EMA. Moving average studies continue to suggest the medium-term trend direction is up. A recovery would refocus attention on the bull trigger at 113-12, the Dec 27 high.
  • Cross asset roundup: WTI Crude Oil (front-month) up $1.4 (1.98%) at $72.16; Gold is up $0.73 (0.04%) at $2028.82; S&P E-Mini Futures down 13 points (-0.27%) at 4787.5.

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