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US TSYS: Tsys Futures Edges Higher, 2yr Yield Makes New Lows Ahead Of FOMC

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures spent the second half of Friday session trading sideways, with all the gains coming during the first hour of trading. The short-end continues to outperform over speculation that there could potentially be a 50bps rate cut, with the speculation only increasing after an article from well Nick Timiraos at the WSJ.
  • Futures held inside a narrow session range after UofM data showed a slight increase in sentiment, a dip in 1Y inflation expectations vs. a slight increase in 5-10Y expectations. 1Y inflation: 2.7% (cons 2.8) after 2.8% in Aug to dip to its lowest since Dec 2020. For what it’s worth, three of the four latest preliminary reports have been revised down in the final release as well.
  • TUZ4 closed the session +0-03¾ at 104-13¼, while TYZ4 closed +0-07+ at 115-13+, the moves higher have continued this morning.
  • Cash tsys curve bull-steepened with yields 1-6bps lower across the curve. The 2yr closed -5.7bps at 3.582% just off new yearly lows of 3.56% while the 10yr closed -2.3bps at 3.651%. The 2s10s closed +3.623 at 6.684.
  • Projected rate hikes through year end firmer vs. late Thursday levels (*) : Sep'24 cumulative -38.1bp (-31.5bp), Nov'24 cumulative -76.6bp (-68.6bp), Dec'24 -117.4bp (-107.5bp).
  • Slow start to the week ahead with Empire Manufacturing early Monday, Tuesday Retail Sales while focus will turn to Wednesday's FOMC announcement
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  • Tsys futures spent the second half of Friday session trading sideways, with all the gains coming during the first hour of trading. The short-end continues to outperform over speculation that there could potentially be a 50bps rate cut, with the speculation only increasing after an article from well Nick Timiraos at the WSJ.
  • Futures held inside a narrow session range after UofM data showed a slight increase in sentiment, a dip in 1Y inflation expectations vs. a slight increase in 5-10Y expectations. 1Y inflation: 2.7% (cons 2.8) after 2.8% in Aug to dip to its lowest since Dec 2020. For what it’s worth, three of the four latest preliminary reports have been revised down in the final release as well.
  • TUZ4 closed the session +0-03¾ at 104-13¼, while TYZ4 closed +0-07+ at 115-13+, the moves higher have continued this morning.
  • Cash tsys curve bull-steepened with yields 1-6bps lower across the curve. The 2yr closed -5.7bps at 3.582% just off new yearly lows of 3.56% while the 10yr closed -2.3bps at 3.651%. The 2s10s closed +3.623 at 6.684.
  • Projected rate hikes through year end firmer vs. late Thursday levels (*) : Sep'24 cumulative -38.1bp (-31.5bp), Nov'24 cumulative -76.6bp (-68.6bp), Dec'24 -117.4bp (-107.5bp).
  • Slow start to the week ahead with Empire Manufacturing early Monday, Tuesday Retail Sales while focus will turn to Wednesday's FOMC announcement