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US TSYS: Extending Yesterday’s PPI Driven Gains Ahead Of CPI

US TSYS
  • Treasuries have nudged through yesterday’s post-PPI highs, aided at the margin by a rolling over in WTI futures, as they push further towards the middle of post-payrolls ranges ahead of today’s CPI report. 
  • Cash yields are 0.3-0.1bp lower on the day, led by the long end, with all benchmark tenors setting new lows for the week. 
  • Both 2Y and 10Y yields sit roughly towards the middle of ranges seen since the initial reaction to the weak payrolls reports, comfortably above the following Monday’s global risk-off but also more than 15bps off last week’s post-jobless claims high for the 2Y. 
  • TYU4 at 113-24(+ 04) has edged past late yesterday’s 113-22, with reasonable cumulative volumes of 265k for a pre-US CPI overnight. 
  • The trend needle points north with resistance at 114-03 (Aug 6 high) and a bull trigger at 115-03+ (Aug 5 high), whilst support is seen at 112-11 (20-day EMA) in the event of a hawkish CPI surprise
  • Data: MBA mortgages Aug 9 (0700ET), CPI Jul (0830ET), Real average earnings Jul (0830ET)
  • Bill issuance: US Tsy $60B 17W Bill auction (1130ET)

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