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US TSYS: Modest Pre-FOMC Consolidation

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Treasuries look to finish weaker but off lows Tuesday, this after climbing briefly to one week highs on the open. Generally quiet position squaring ahead of tomorrow's FOMC policy announcement where markets still project closer  to a 50bp cut than a 25bp move from the Fed.
  • Projected rate hikes through year end gain slightly vs. late Monday levels (*): Sep'24 cumulative -42.3bp (-41.5bp), Nov'24 cumulative -78.8bp (-78.2bp), Dec'24 -118.3bp (-119.8bp).
  • Retail Sales headline beat and a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp) -- was slightly on the strong side of consensus, should do little to persuade or dissuade the Fed from cutting either 25bp or 50bp on Wednesday.
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%). Manufacturing production led the increase with 0.9% M/M (cons 0.2) but it also drove the downward revision with -0.7% (initial -0.3%).
  • Volumes accelerated in the second half, Dec'24 10Y over 1.6M as the contract dipped 7.5 to 115-10.5, still well above initial technical support of 114-31.5 (Low Sep 12). Curves flattened but were off lows, 2s10s -1.575 at 4.890 at the bell vs. 1.898 low.
  • Tomorrow's FOMC announcement includes the Summary of Economic projections.
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  • Treasuries look to finish weaker but off lows Tuesday, this after climbing briefly to one week highs on the open. Generally quiet position squaring ahead of tomorrow's FOMC policy announcement where markets still project closer  to a 50bp cut than a 25bp move from the Fed.
  • Projected rate hikes through year end gain slightly vs. late Monday levels (*): Sep'24 cumulative -42.3bp (-41.5bp), Nov'24 cumulative -78.8bp (-78.2bp), Dec'24 -118.3bp (-119.8bp).
  • Retail Sales headline beat and a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp) -- was slightly on the strong side of consensus, should do little to persuade or dissuade the Fed from cutting either 25bp or 50bp on Wednesday.
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%). Manufacturing production led the increase with 0.9% M/M (cons 0.2) but it also drove the downward revision with -0.7% (initial -0.3%).
  • Volumes accelerated in the second half, Dec'24 10Y over 1.6M as the contract dipped 7.5 to 115-10.5, still well above initial technical support of 114-31.5 (Low Sep 12). Curves flattened but were off lows, 2s10s -1.575 at 4.890 at the bell vs. 1.898 low.
  • Tomorrow's FOMC announcement includes the Summary of Economic projections.