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US TSYS: Tsys Futures Erase Earlier Gains, 10yr Yield Tracks Trump/Harris Spread

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures continue to push lower and now comfortably trade below Monday's lows, volumes are almost double those of recent averages. The front-end is holding up better than further out the curves although it has given back earlier gains. TU is - 01 at 103-08, while TY is -06+ at 111-10 and has broken below 111-14 (50.0% retracement of the Apr - Sep bull cycle (cont)), with next support seen at the July 22 lows of 111-00.
  • The cash tsys curve has bear-steepened, an earlier TU/UXY block steepener looks to have contributed to the sell-off over the past few hours. The 2yr is +1bps at 4.041%, while the 10yr is +1.8bps at 4.214% back at July 26 highs. The 2s10s is +1bps at 17.253, the steepest since Sept 27th
  • The 10yr yield have been tracking the Polymarket Trump v Harris spread, with Trump taken a commanding lead with odds now 63.5% vs 36.3%, while the 10yr yield is now 60bps off the September lows.
  • The Fed's Mary Daly stated that the Fed is likely to continue cutting interest rates to protect the labor market from further weakening, noting no signs to halt rate reductions. Last month, the Fed lowered rates by half a percentage point to 4.75%-5%, with Daly supporting the larger cut due to labor market concerns. There was little reaction from tsys following her comments.
  • Projected rate cuts recede vs. Monday morning's levels (*): Nov'24 cumulative -23bp (-23.0bp), Dec'24 -39.7bp (-42.7bp), Jan'25 -57.6bp (-60.1bp)
  • There is no meaningful economic data, focus on home sales flash PMIs, weekly claims, durables and UofM sentiment later this week.
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  • Tsys futures continue to push lower and now comfortably trade below Monday's lows, volumes are almost double those of recent averages. The front-end is holding up better than further out the curves although it has given back earlier gains. TU is - 01 at 103-08, while TY is -06+ at 111-10 and has broken below 111-14 (50.0% retracement of the Apr - Sep bull cycle (cont)), with next support seen at the July 22 lows of 111-00.
  • The cash tsys curve has bear-steepened, an earlier TU/UXY block steepener looks to have contributed to the sell-off over the past few hours. The 2yr is +1bps at 4.041%, while the 10yr is +1.8bps at 4.214% back at July 26 highs. The 2s10s is +1bps at 17.253, the steepest since Sept 27th
  • The 10yr yield have been tracking the Polymarket Trump v Harris spread, with Trump taken a commanding lead with odds now 63.5% vs 36.3%, while the 10yr yield is now 60bps off the September lows.
  • The Fed's Mary Daly stated that the Fed is likely to continue cutting interest rates to protect the labor market from further weakening, noting no signs to halt rate reductions. Last month, the Fed lowered rates by half a percentage point to 4.75%-5%, with Daly supporting the larger cut due to labor market concerns. There was little reaction from tsys following her comments.
  • Projected rate cuts recede vs. Monday morning's levels (*): Nov'24 cumulative -23bp (-23.0bp), Dec'24 -39.7bp (-42.7bp), Jan'25 -57.6bp (-60.1bp)
  • There is no meaningful economic data, focus on home sales flash PMIs, weekly claims, durables and UofM sentiment later this week.