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US TSYS: Tsys Futures Edge Higher, Ex-Fed Dudley Sees 50bps Cut Chance

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures are higher today, although all the moves came in the first half of the session which looked like a follow on from a large block trade made post the NY close which looked like a bet on a 50bps cut next week. Fed fund futures firmed post the trade with the market pricing moving from a 10% chance of a 50bps cut to about a 45bps chance now.
  • Ex-NY Fed Pres Dudley sees a strong case for a half-point rate cut at the FOMC meeting, citing a weakening U.S. labor market and risks to jobs outweighing inflation concerns. While most expect a quarter-point cut, Dudley emphasized Powell's reluctance to allow further labor market weakness, and noted that some Wall Street banks, like Citigroup and JPMorgan, are pushing for more aggressive action.
  • There was little reaction in tsys futures to the comments from Dudley, with TUZ4 now +03 ⅜ at 104-12⅞, while TYZ4 is +07+ at 115-13.
  • The cash tsys curve has steepened with yield 1-6bps lower. The 2yr is now -5.5bps at 3.584%, while the 10yr is -2.8bps at 3.646% the 2s10s is +2.583 at 5.915
  • There was just the one Block traded today, a likely seller of TYZ4 at 115-12+, DV01 $135k, contract little changed since.
  • Projected rate hikes have firmed throughout the session vs Thursday open levels (*) : Sep'24 cumulative -37.7bp (-29.4bp), Nov'24 cumulative -76.2bp (-65.2bp), Dec'24 -117.6bp (-106.0bp).
  • Later today we have Import/Export Prices and U. of Mich. Sentiment.
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  • Tsys futures are higher today, although all the moves came in the first half of the session which looked like a follow on from a large block trade made post the NY close which looked like a bet on a 50bps cut next week. Fed fund futures firmed post the trade with the market pricing moving from a 10% chance of a 50bps cut to about a 45bps chance now.
  • Ex-NY Fed Pres Dudley sees a strong case for a half-point rate cut at the FOMC meeting, citing a weakening U.S. labor market and risks to jobs outweighing inflation concerns. While most expect a quarter-point cut, Dudley emphasized Powell's reluctance to allow further labor market weakness, and noted that some Wall Street banks, like Citigroup and JPMorgan, are pushing for more aggressive action.
  • There was little reaction in tsys futures to the comments from Dudley, with TUZ4 now +03 ⅜ at 104-12⅞, while TYZ4 is +07+ at 115-13.
  • The cash tsys curve has steepened with yield 1-6bps lower. The 2yr is now -5.5bps at 3.584%, while the 10yr is -2.8bps at 3.646% the 2s10s is +2.583 at 5.915
  • There was just the one Block traded today, a likely seller of TYZ4 at 115-12+, DV01 $135k, contract little changed since.
  • Projected rate hikes have firmed throughout the session vs Thursday open levels (*) : Sep'24 cumulative -37.7bp (-29.4bp), Nov'24 cumulative -76.2bp (-65.2bp), Dec'24 -117.6bp (-106.0bp).
  • Later today we have Import/Export Prices and U. of Mich. Sentiment.