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US TSYS: TD Securities Take Profit on Their Long UST Position

US TSYS

TD Securities write that:

  • Markets are now over 100% priced for a 25bps Fed cut in September, hinting at some modest pricing for 50bps. Given that the Fed are unlikely to explicitly commit to a Sept cut this week, this pricing could fade.
  • Friday's NFP may see decline in 3m avg payrolls pace slow, prompting a pare in recent pricing
  • They had entered the position at the start of this month on the strong technical set-up, more favourable carry and rate cut pricing.  Nonetheless they continue to favour buying on dips given their expectation for 10s to reach 3.9% by year-end.

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