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US TSYS: Tsys Futures Slightly Lower, 50bp Rate Cut Chance Rise

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Tsys futures slowly drifted lower heading into the US session on Thursday, there was little reaction to the ECB cutting rates 25bps. Futures gapped higher on US data, although this was quickly reversed to trade mildly lower than pre-data levels.
  • There was a WSJ article from Nick Timiraos where he quoted ex-Powell adviser Jon Faust saying it's a "close call" between 25bp and 50bp, pricing has shifted to around 20% probability of a 50bp cut, vs <10% earlier today, basically reversing the pricing out seen after yesterday's stronger-than-expected core CPI data.
  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • TUZ4 closed -0-00⅝ at 104-09+, while TYZ4 closed -0-04+ at 115-06
  • Cash tsys curve bear-steepened, with yields -0.2bps to +2.5bps. The 2yr is -0.2bps at 3.639%, while the 10yr is +2.1bps at 3.674%.  the 2s10s curve briefly inverted again on Thursday, before closing the session +2.074 at 3.062.
  • There was a $22b 30yr bond auction overnight which saw slightly weak pricing, tailing slightly with 4.015% high yield vs. 4.000%. The 15.7% primary dealer award was lower than previous as indirect award increased to 68.7%, direct award to 15.7%; 2.38 bid-to-cover ratio compared with 2.41 average for the past six reopenings.
  • Still off early week highs projected rate hikes have drifted off morning lows (*) : Sep'24 cumulative -31.5bp (-29.4bp), Nov'24 cumulative -68.6bp (-65.9bp), Dec'24 -107.5bp (-104.5bp).
  • Focus turns to Friday's Import/Export prices data and UofM Inflation Expectations
 
 
 
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  • Tsys futures slowly drifted lower heading into the US session on Thursday, there was little reaction to the ECB cutting rates 25bps. Futures gapped higher on US data, although this was quickly reversed to trade mildly lower than pre-data levels.
  • There was a WSJ article from Nick Timiraos where he quoted ex-Powell adviser Jon Faust saying it's a "close call" between 25bp and 50bp, pricing has shifted to around 20% probability of a 50bp cut, vs <10% earlier today, basically reversing the pricing out seen after yesterday's stronger-than-expected core CPI data.
  • Overnight, PPI final demand was slightly-above-expectations at 0.2% vs 0.1%, although this was offset by down-revisions to prior, weekly claims slightly higher than expected: 230k (cons 227k) in the week to Sep 7 after a marginally upward revised 228k (initial 227k).
  • TUZ4 closed -0-00⅝ at 104-09+, while TYZ4 closed -0-04+ at 115-06
  • Cash tsys curve bear-steepened, with yields -0.2bps to +2.5bps. The 2yr is -0.2bps at 3.639%, while the 10yr is +2.1bps at 3.674%.  the 2s10s curve briefly inverted again on Thursday, before closing the session +2.074 at 3.062.
  • There was a $22b 30yr bond auction overnight which saw slightly weak pricing, tailing slightly with 4.015% high yield vs. 4.000%. The 15.7% primary dealer award was lower than previous as indirect award increased to 68.7%, direct award to 15.7%; 2.38 bid-to-cover ratio compared with 2.41 average for the past six reopenings.
  • Still off early week highs projected rate hikes have drifted off morning lows (*) : Sep'24 cumulative -31.5bp (-29.4bp), Nov'24 cumulative -68.6bp (-65.9bp), Dec'24 -107.5bp (-104.5bp).
  • Focus turns to Friday's Import/Export prices data and UofM Inflation Expectations