Tsys rally on Soft Retail Sales & 20Y Auction

Treasuries gap higher after lower Retail Sales data and strong 20Y Bond auction, before paring some gains briefly as some Fed speakers pushed back on dovish expectations (Boston Fed Collins: "shouldn't overreact to a month or two of good inflation data"; StL Fed Musalem "could be 'quarters' before the first rate cut").

• Treasury futures sold off a touch post the bell, with the long-end slightly out--performing. TUU4 ended the session +0-03+ at 102-08⅛ vs a high of 109-09, while TYU4 ended +0-12+ at 110-25+ vs a high of 110-28+. We have opened a touch lower this morning.
• A bull cycle in Treasuries remains in play and the contract traded higher last week. Price has cleared resistance at 110-21, the Jun 7 high. 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 tightened on Tuesday with yields 5-7bps lower. The 2Y +5.3bps to 4.712%, 7Y -5.7bps to 4.221%, the 10Y -5.8bps at 4.223% while the 2y10y was -0.686 at -49.357.
• Data: Advance MoM (0.1% vs. 0.3% est, prior down revised to -0.2% from 0.0%), Ex Auto MoM (-0.1% vs. 0.2% est, prior down-revised to -0.1% from 0.2%), Ex Auto and Gas (0.1% vs. 0.4% est, prior revised to -0.3% from -0.1%). Retail Sales Control Group (0.4% vs. 0.5% est, prior revised to -0.5% from -0.3%).
• Projected rate cut pricing regaining momentum (but still off Friday highs). Post-Retail Sales vs. pre-data: July'24 steady at -8% w/ cumulative at -2bp at 5.307%, Sep'24 cumulative -18.1bp (-16.1bp), Nov'24 cumulative -27.8bp (-25.3bp), Dec'24 -48.3bp (-44.5bp).
• Looking ahead, MBA Mortgage Applications.