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US TSYS: Bear Flatter On German CPI and Looming Strikes

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Treasuries have recently pulled back off lows but have still seen a surprisingly large bear flattening stemming from German regional CPI releases that belied dovish surprises seen in last week’s French and Spanish prints.
  • Supply chain disruption is also at the fore with a major strike of ~45k dockworkers at eastern and Gulf ports looking set to go ahead at midnight tonight.
  • The moves belatedly follow overnight strength in China equities and related commodity prices (iron ore at multi-month highs) after further stimulus, this time centered on real estate. That seems a marginal factor though considering the flattening moves seen plus S&P 500 futures seeing little boost.
  • Cash yields are 1bps (30s) to 5bps (2s) higher on the day, with the entirety of those front-end increases coming since German CPI prints.
  • 2s10s at 16.5bps (-3bps) has pushed back towards the low end of Friday’s range to leave it more firmly off last week’s fresh ytd high of 24bps.
  • TYZ4 sits at 114-16+ (-07) on reasonable volumes of 315k but has remained within Friday’s range throughout. Support is seen at 114-07 (Sep 26 low) with a corrective cycle in play, whilst resistance is seen at 115-02+ (Sep 19 high).
  • Data: MNI Chicago PMI Sep (0945ET), Dallas fed mfg Sep (1030ET)
  • Fedspeak: Bowman on outlook/policy (text + Q&A), Fed Chair Powell at NABE conf (text + Q&A)
  • Bill issuance: US Tsy $79B 13W & $72B 26W bill auctions (1130ET)
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  • Treasuries have recently pulled back off lows but have still seen a surprisingly large bear flattening stemming from German regional CPI releases that belied dovish surprises seen in last week’s French and Spanish prints.
  • Supply chain disruption is also at the fore with a major strike of ~45k dockworkers at eastern and Gulf ports looking set to go ahead at midnight tonight.
  • The moves belatedly follow overnight strength in China equities and related commodity prices (iron ore at multi-month highs) after further stimulus, this time centered on real estate. That seems a marginal factor though considering the flattening moves seen plus S&P 500 futures seeing little boost.
  • Cash yields are 1bps (30s) to 5bps (2s) higher on the day, with the entirety of those front-end increases coming since German CPI prints.
  • 2s10s at 16.5bps (-3bps) has pushed back towards the low end of Friday’s range to leave it more firmly off last week’s fresh ytd high of 24bps.
  • TYZ4 sits at 114-16+ (-07) on reasonable volumes of 315k but has remained within Friday’s range throughout. Support is seen at 114-07 (Sep 26 low) with a corrective cycle in play, whilst resistance is seen at 115-02+ (Sep 19 high).
  • Data: MNI Chicago PMI Sep (0945ET), Dallas fed mfg Sep (1030ET)
  • Fedspeak: Bowman on outlook/policy (text + Q&A), Fed Chair Powell at NABE conf (text + Q&A)
  • Bill issuance: US Tsy $79B 13W & $72B 26W bill auctions (1130ET)