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US PMIs Follow Weaker EGB Metric's Lead

US TSYS
  • Treasury futures trading firmer after the bell, but holding to narrow range since late morning after scaling off from post-data highs: TYU3 currently 113-01.5 +10 vs. 113-15.5 high; 2s10s curve at -101.173 after extending inversion to -103.544 low vs. March' 40Y low around -110.0.
  • Fast two-way trade noted earlier as front month Treasury futures extended support then reversed after S&P Global US PMI data comes out lower than expected: Manufacturing PMI (46.3 vs. 48.5 est); Services PMI (54.1 vs. 54.0 est) Composite PMI (53.0 vs. 53.5 est).
  • Treasury futures tracked higher EGBs overnight after lower than projected European PMIs overnight (France servicer PMI 48 vs 52.1 est; Germany mfg PMI 41.0 vs. 43.5 est; EU and UK softer as well).
  • Cooler inflation metrics slightly tempered projected US rate hike at one of the next three meetings, though Nov'23 implied rate still fully pricing in a hike. First full 25bp rate CUT has pushed out to May 2024.
  • Atlanta Fed Pres Bostic (non-voter in 2023) comments at Bank event with CFOs contributing to latest move: NOT SEEING ELEMENTS OF RISK APPEARING IN ECONOMY, Bbg.
  • Meanwhile, SF Fed Pres Daly could be one of the 9 FOMC members in the two-hike camp for 2023, telling Reuters that 50bp of further tightening this year is "a very reasonable projection at this point...but no decision, for me, has been made." Echoing Chair Powell's comments the past two weeks, Daly said "it is, in my judgment, prudent policy... to slow the pace of policy as you near the destination."

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