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US TSYS: Tsys Futures Edge Higher, Short End Outperforms As Curve Steepens

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures closed higher on Tuesday with the short-end out-performing as the 2yr yield tests yearly lows. Futures did trade lower into the US session before weaker-than-expected US consumer confidence caused a strong bounce, with yield curves then bull-steepening. TU closed +0-01⅝ at 104-12¾, while TY closed +0-02+ at 114-27.
  • There was a 2yr $69 billion bond auction overnight which drew the expected yield of 3.520%, the lowest for a two-year note auction since August 2022 while the bid/cover ratio was slightly down of prior at 2.590. The solid reception to the 2yr auction, which was effectively at the highs of the day, reinforced the ongoing demand for the front-end of the curve.
  • Data was markedly weaker than expected in September. Consumer confidence fell to 98.7 (cons 104.0) for a sizeable slip after an upward revised 105.6 (initial 103.3) in Aug. Declines were seen in both the present situation and expectations components.
  • Cash tsys curves steepened with the short end outperforming, yields were 1-5bps lower with the 2yr trading -4.9bps at 3.538%, while the 10yr -2.1bps at 3.728%. The 2s10s curve continues to make new highs climbing to intraday high of 20.213 before closing at 18.406, while the 5s30s taps 62.011 high.
  • Projected rate cuts into early 2025 gain traction, latest vs. Tuesday morning levels (*) as follows: Nov'24 cumulative -39.8bp (-38.5bp), Dec'24 -78.6bp (-74.4bp), Jan'25 -113.0bp (-108.0bp).
  • Looking ahead to Wednesday's session: MBA Mortgage apps, New Home Sales, $28B 2Y FRN, $62B 17W bill auctions, $70B 5Y at 1300ET.
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  • Tsys futures closed higher on Tuesday with the short-end out-performing as the 2yr yield tests yearly lows. Futures did trade lower into the US session before weaker-than-expected US consumer confidence caused a strong bounce, with yield curves then bull-steepening. TU closed +0-01⅝ at 104-12¾, while TY closed +0-02+ at 114-27.
  • There was a 2yr $69 billion bond auction overnight which drew the expected yield of 3.520%, the lowest for a two-year note auction since August 2022 while the bid/cover ratio was slightly down of prior at 2.590. The solid reception to the 2yr auction, which was effectively at the highs of the day, reinforced the ongoing demand for the front-end of the curve.
  • Data was markedly weaker than expected in September. Consumer confidence fell to 98.7 (cons 104.0) for a sizeable slip after an upward revised 105.6 (initial 103.3) in Aug. Declines were seen in both the present situation and expectations components.
  • Cash tsys curves steepened with the short end outperforming, yields were 1-5bps lower with the 2yr trading -4.9bps at 3.538%, while the 10yr -2.1bps at 3.728%. The 2s10s curve continues to make new highs climbing to intraday high of 20.213 before closing at 18.406, while the 5s30s taps 62.011 high.
  • Projected rate cuts into early 2025 gain traction, latest vs. Tuesday morning levels (*) as follows: Nov'24 cumulative -39.8bp (-38.5bp), Dec'24 -78.6bp (-74.4bp), Jan'25 -113.0bp (-108.0bp).
  • Looking ahead to Wednesday's session: MBA Mortgage apps, New Home Sales, $28B 2Y FRN, $62B 17W bill auctions, $70B 5Y at 1300ET.