Yields Rise, CPI In Focus

TYH3 deals at 113-26+, unch. vs. settlement, in line with levels seen late in the NY session.

• Cash Tsys finished 1-3bps cheaper at the bell on Monday with the front end of the curve leading the weakness.
• Fed whisperer Timiraos noted in the WSJ that "cracks are beginning to emerge" between Fed officials on how stubborn inflation has become and how the Fed should approach the challenge with the story suggesting that officials are “divided” over the path of monetary policy.
• Oil prices, firmed pressuring the FI space, with WTI up ~3.5% in yesterday's trading.
• The latest 10-Year auction spurred further Tsy weakness, generating a tail of over 3bp, alongside a sub-average cover ratio and above average dealer takedown.
• Ahead of Wednesday's FOMC meeting OIS pricing is stable with a 50 bps hike fully priced in (data OIS has 52 bps of tightening priced to be exact) and a terminal rate of 4.99% up ~3bps yesterday, peaking in June 2023.
• There is a thin data calendar in Asia-Pac hours today. Further out participants are focused on the US Nov CPI print (MoM 0.3% est, YoY 7.3% est), with pre-CPI positioning adjustments witnessed since Friday's PPI release. On the supply front, we will see the latest 30-Year Tsy auction.