Cash tsys have opened dealing 2-4bps cheaper across the major benchmarks, light bear steepening is apparent. Local participants have faded the bull flattening seen on Friday, the USD has trimmed gains in early trade and US Equity futures are higher. In the commodities space Oil is holding onto Friday's gains thus far. Over the weekend the US held talks with Iran through back-channels to head off a widening of the conflict.
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JGBs sold off sharply on Sep 11 and the contract has traded through support at 145.49, the Aug 17 low. A clear break of this area would confirm a resumption of the medium-term downtrend and pave the way for weakness towards 144.39, the lower band of a MA envelope study. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
With few exceptions, SOFR/Treasury option trade centered on low delta puts and put spreads Friday as underlying futures traded weaker, see-sawing near the low end of Friday's session range. Rate hike projections through year end cooled: Sep 20 FOMC is 3.8% w/ implied rate change of +0.09bp to 5.338%. November cumulative of +8.2p at 5.410, December cumulative of 11.1bp at 5.439%. Fed terminal at 5.435% in Jan'24.