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Twist Steepening With Front End Bid Ahead Of FOMC Later

  • Cash Tsys see a twist steepening, for the most part rallying with the front end leading but the 30Y selling off further after yesterday’s large tail at the re-open auction. Front-end yields have chipped away at yesterday’s rise off post-CPI lows, with the 2Y of 4.18% off extremes of 4.1327% but still down 19bps on pre-CPI levels.
  • Treasuries outperform EU FI with Germany announcing record issuance plans for 2023, with an eye on today’s FOMC decision.
  • 2YY -3.2bps at 4.186%, 5YY -2.9bps at 3.621%, 10YY -0.2bps at 3.499% and 30YY +1.8bps at 3.552%.
  • TYH3 trades 2 ticks higher at 114-27 on modestly above average volumes. It’s off the post-CPI high of 115-11+ which now forms initial resistance. Multiple resistance levels a little higher with 115-14 (50% of the Aug-Oct downleg) and 115-26 (2 proj of the Oct 21 -27-Nov 3 price swing), whilst support is seen at 113-22+ (Dec 12 low).
  • FOMC policy announcement (1400ET) and press conference (1430ET).
  • Data: Weekly MBA mortgage apps (0700ET), international prices for Nov (0830ET)
  • Bill issuance: US Tsy $33B 17W bill auction (1130ET).

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