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Tsys Near Highs, Weaker ISMs Outweigh Surge in Oil

US TSYS
  • Tsys near midday highs after the bell, wide range for the week opener as lower than expected ISM data leavened concerns over higher inflation tied to a surge in crude prices overnight.
  • Tsys gapped lower Sunday evening after OPEC+ announced over 1M bbl/day production cut, surprising markets and underscoring inflation concerns (read: prospect for renewed rate hikes).
  • Tsy futures gapped higher after lower than expected ISMs quashed the oil-tied inflation/rate hike concerns. Drops in ISM sub-indices across the board (with the exceptions of production and customer inventories), with every one in below-50 territory. New orders, prices paid, and Employment down sharply.
  • Fed funds implied hike for May'23 at 16.2bp, Jun'23 +13.8bp cumulative at 4.954% late. Meanwhile, projected rate cuts later in the year gained: Sep'23 cumulative -14.7bp (-11.1bp earlier) to 4.674%, to -50.4bp (40.6 earlier) for Dec'23 at 4.312.
  • Front month Jun'23 10Y futures bounced back to March 27 level 115-21.5 (+24) , 115-16 after the bell, 10Y yield dropped to 3.3983% low vs. 3.4226% late. TYM3 through March 28 high resistance (115-07.5) put focus on key resistance of 116-06+/117-01+ High Mar 27 / High Mar 24 and bull trigger.
  • Markets may be more volatile this week due to thin liquidity w/ early Friday close ahead Easter weekend/spring holiday for some. Nevertheless, March employment data scheduled for Friday release (+240k est vs. +310k prior); ADP private employ this Wednesday (+210k est vs. +242k prior).
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