September 27, 2024 19:36 GMT
US TSYS: Curves Bounce as Projected Cuts Gain Momentum Post-PCE
US TSYS
- Treasuries are higher after the bell, trading sideways through the second half after marking session high affter noon. Dec'24 10Y Tsy futures are currently +10.5 at 114-23.5 vs. 114-25 high with initial technical resistance at 115-02.5 (Sep 19 high).
- Curves recovered some ground after Thu's flattening as morning data underscored a rise in projected rate cuts into early 2025 gained vs. pre-data levels (*): Nov'24 cumulative -38.5bp (-37.2bp), Dec'24 -76.8bp (-73.9bp), Jan'25 -109.5bp (-104.5bp).
- Personal income and spending were a little softer than expected in August on a nominal basis, but in "real" terms this was a solid report and data going back to the start of the year were largely revised in a stronger direction.
- Core PCE inflation confirmed trend rates very similar to what Fed Governor Waller had indicated last week. That leaves inflation over the latest four months a little below the 2% PCE target and “supercore” inflation almost at target (although both a little stronger more recently).
- UofM inflation expectations: 1Y: 2.7% (cons 2.7, prelim 2.7) after 2.8% in Aug to confirm a dip to its lowest since Dec 2020. 5-10Y: 3.1% (cons 3.0, prelim 3.1) after 3.0% in Aug.
- Looking ahead: relatively quiet start to next week with MNI Chicago PMI on Monday, ISMs Tuesday, ADP private employment data Wednesday and the September jobs report headlining next week Friday.
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