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US TSYS: Tsys Yields Cheaper, Potential Tariff Exemptions

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys futures swung between gains and losses overnight, tsys unwound early gains in the US morning session after February ISM services index rose unexpectedly, yields then closed near session highs there was a huge $26b eight tranche Mars deal, that has been weighing on yields and investors waiting for it to price. Oil prices pared losses, while equities jumped which added to the moves, while the German bond market experienced its worst selloff in years.
  • TU closed -0-01¾ at 103-16⅛, TY closed  -12 at 110-28 with the moves continuing in early morning Asia trading. In tsys options flow major highlights included a large vol sale via May straddles, looking to fade the recent tick higher in rates vol for a premium of roughly $10m, as per bbg.
  • Cash tsys curves bear-steepened slightly, with yields closing 1-4bps cheaper across the curve. The 2yr closed +1.4bps at 4.005%, after initially trading to 3.89%, while the 10yr closed +3.4bps at 4.278% after hitting a low of 4.1832%. The 2s10s jumped 6bps to 31bps, before giving back some of the move to close +2bps at 27bps
  • Trump is considering exempting certain agricultural products from tariffs imposed on Canada and Mexico. The administration has delayed tariffs on automotive imports from Mexico and Canada for one month, following pleas from industry executives.
  • Projected rate cuts through mid-2025 recede from morning levels (*) as follows: Mar'25 at -2.2bp, May'25 at -10.6bp (-12.2bp), Jun'25 at -27bp (-29.2bp), Jul'25 at -36.2bp (-39.8bp).
  • Later today we have weekly claims trade balance and regional Fed data, focus turns to Friday's headline employment data for February.
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  • Tsys futures swung between gains and losses overnight, tsys unwound early gains in the US morning session after February ISM services index rose unexpectedly, yields then closed near session highs there was a huge $26b eight tranche Mars deal, that has been weighing on yields and investors waiting for it to price. Oil prices pared losses, while equities jumped which added to the moves, while the German bond market experienced its worst selloff in years.
  • TU closed -0-01¾ at 103-16⅛, TY closed  -12 at 110-28 with the moves continuing in early morning Asia trading. In tsys options flow major highlights included a large vol sale via May straddles, looking to fade the recent tick higher in rates vol for a premium of roughly $10m, as per bbg.
  • Cash tsys curves bear-steepened slightly, with yields closing 1-4bps cheaper across the curve. The 2yr closed +1.4bps at 4.005%, after initially trading to 3.89%, while the 10yr closed +3.4bps at 4.278% after hitting a low of 4.1832%. The 2s10s jumped 6bps to 31bps, before giving back some of the move to close +2bps at 27bps
  • Trump is considering exempting certain agricultural products from tariffs imposed on Canada and Mexico. The administration has delayed tariffs on automotive imports from Mexico and Canada for one month, following pleas from industry executives.
  • Projected rate cuts through mid-2025 recede from morning levels (*) as follows: Mar'25 at -2.2bp, May'25 at -10.6bp (-12.2bp), Jun'25 at -27bp (-29.2bp), Jul'25 at -36.2bp (-39.8bp).
  • Later today we have weekly claims trade balance and regional Fed data, focus turns to Friday's headline employment data for February.