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US TSYS: Tsys Futures Continue Sell-Off Post NFP, 2yr Tests 4%

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures closed near session lows on Monday with Front-end tsys leading the losses the move was a continuation of the sell-off post NFP seen as the driver. Tsys curves traded back to inverted throughout the session before reversing the move.
  • TU closed - 04⅝ at 103-12+, while TY closed - 11+ at 112-15 with the contract now trading just on initial support of 112-14+/13+ 38.2% retracement of the Apr - Sep bull cycle (cont)/ Low Oct 7 with a break here opening a move to 112-00.
  • There was no fresh data related catalyst for Monday’s extended selloff as traders continued to digest Friday’s payrolls data and subsequent price action. However oil did continue to climb as mounting tensions in the Middle East raised speculation that Israel may attack Iran’s oil infrastructure.
  • Cash tsys curves bear-flattened with yields 5-8bps higher. The 2yr closed +7.3bps at 3.995%, while the 10yr +5.8bps to 4.026% the highest since late July. The 2s10s inverted , hitting a -1.248, before reversing the moved to closed the session -1.302 at 2.829.
  • Meanwhile, projected rate cuts continue to recede. November is now no longer fully pricing in a 25bp cut: Nov'24 cumulative -22bp (-26.6bp late Fri), Dec'24 -48.5bp (-57.2bp), Jan'25 -68.4bp (-80.9bp).
  • Investors showed a preference for the 6m T-bill over the 3m bill in Monday's auction, as markets adjusted expectations for Federal Reserve rate cuts following last week's strong jobs report. The 6m bill had higher indirect demand, with a record $88.6b in bids, while indirect bidders were awarded only 55.6% of the 3m bill compared to 61.2% for the 6m.
  • Shortly the Fed's Bostic, followed by Musalem will speak, later today we have Trade Balance while focus will turn to Wednesday's minutes for the September FOMC, CPI on Thursday and PPI Friday.
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  • Tsys futures closed near session lows on Monday with Front-end tsys leading the losses the move was a continuation of the sell-off post NFP seen as the driver. Tsys curves traded back to inverted throughout the session before reversing the move.
  • TU closed - 04⅝ at 103-12+, while TY closed - 11+ at 112-15 with the contract now trading just on initial support of 112-14+/13+ 38.2% retracement of the Apr - Sep bull cycle (cont)/ Low Oct 7 with a break here opening a move to 112-00.
  • There was no fresh data related catalyst for Monday’s extended selloff as traders continued to digest Friday’s payrolls data and subsequent price action. However oil did continue to climb as mounting tensions in the Middle East raised speculation that Israel may attack Iran’s oil infrastructure.
  • Cash tsys curves bear-flattened with yields 5-8bps higher. The 2yr closed +7.3bps at 3.995%, while the 10yr +5.8bps to 4.026% the highest since late July. The 2s10s inverted , hitting a -1.248, before reversing the moved to closed the session -1.302 at 2.829.
  • Meanwhile, projected rate cuts continue to recede. November is now no longer fully pricing in a 25bp cut: Nov'24 cumulative -22bp (-26.6bp late Fri), Dec'24 -48.5bp (-57.2bp), Jan'25 -68.4bp (-80.9bp).
  • Investors showed a preference for the 6m T-bill over the 3m bill in Monday's auction, as markets adjusted expectations for Federal Reserve rate cuts following last week's strong jobs report. The 6m bill had higher indirect demand, with a record $88.6b in bids, while indirect bidders were awarded only 55.6% of the 3m bill compared to 61.2% for the 6m.
  • Shortly the Fed's Bostic, followed by Musalem will speak, later today we have Trade Balance while focus will turn to Wednesday's minutes for the September FOMC, CPI on Thursday and PPI Friday.