Tsys Lower As Corporate Supply Weighs, Projected Yr End Rate Cuts Ease

Treasury futures finished the session at session's worst. Initial weakness tied to cooling French political uncertainty over the weekend. Rates broke through a narrow overnight range amid word Home Depot would issue corporate debt over 9 tranches. Speculative selling added to rate lock hedging well before the $10B 9pt launched, lion's share of just over $20B total issuance on the day.

• Treasury futures traded in very tight ranges during the Asian Session on Monday, before selling off as the US logged in. TUU4 ended -0-04⅞ at 102-04⅝, while TYU4 finished the session -0-14 at 110-13, we have opened trading on Tuesday largely in line with closing levels.
• A bull cycle in Treasuries remains in play and the contract traded higher last week. Price cleared resistance at 110-21, the Jun 7 high although we are now back under these levels. Initial support is at 109-19+ (50-day EMA) a break here would opened a move to 109-00+ (Jun 10 low & Key support), to the upside 111-01 (Jun 14 high) is initial resistance, a break here would open a move to 111-09 (Apr 1 high)
• Cash treasury curve bear-flattened on Monday, yields were 5-7bps higher. The 2Y +6.1bps to 4.765%, 7Y +6.2bps to 4.278%, the 10Y +6bps at 4.281% while the 2y10y was -0.106 at -48.670.
• Short end selling sees rate cut projections cooling vs. late Friday levels (*): July'24 at -10% w/ cumulative at -2.5bp at 5.302%, Sep'24 cumulative -17.5bp (20bp), Nov'24 cumulative -26.6bp (-29.9bp), Dec'24 -46.1bp (-50.5bp).
• Looking ahead, Retail Sales, IP/Cap-U and TIC Flows, Several Fed speakers on tap as well.