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US TSYS: Modestly Cheaper, Jobless Claims And Flash PMIs In Focus

US TSYS
  • Treasuries have sold off across the curve in European hours, aided by stronger EZ PMIs despite concerns of being boosted by temporary Olympics-related services strength from France. There is also arguably a supply chain pressure angle, especially at the front end, as major Canadian rail strikes went ahead today even if they weren’t likely a complete surprise.  
  • Today’s focus is on jobless claims – with initial claims covering a payrolls reference period – and flash PMIs but there are also various FOMC appearances throughout the session. 
  • Cash yields are 2.1-3.4bps higher, led by 3s. The front end to belly remains within yesterday’s range but longer-dated yields are breaking higher after yesterday’s bull steepening with 2s10s at -13.6bps. 
  • TYU4 at 113-17 (- 11) is at the low end of yesterday’s range having pulled back from its high of 114-01 whilst volumes are elevated at a cumulative 390k but boosted by roll activity. 
  • The trend needle still points north despite the overnight decline. Resistance is seen at 114-03 (Aug 6 high) before 114-16 (Fibo retracement of Aug 5-8 pullback). 
  • Data: Weekly jobless claims (0830ET), Chic Fed national activity Jul (0830ET), S&P US prelim Aug (0945ET), Existing home sales Jul (1000ET) and KC Fed mfg Aug (1100ET)
  • Fedspeak: Schmid on CNBC (0730ET), Collins on Fox Business (approx. 0830ET), Harker on CNBC (1000ET).
  • Note/bond issuance: US Tsy $8B 30Y Tips reopen auction (1300ET)
  • Bill issuance: US Tsy $95b 4- and $90b 8W bill auctions (1130ET)

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