US DATA: Fifth Consecutive Sub-200k Week For Initial Jobless Claims

European curves steepened Tuesday, though longer-end yields closed off intraday highs.

• Gilts led a pullback in yields from overnight highs after the Telegraph reported that the BoE will halt APF sales on longer dated instruments.
• UK labour market data was mixed though we continue to note this has been de-emphasised somewhat by the MPC recently and indeed on the day BoE-dated OIS was little changed, showing ~7bp of tightening for Thursday's decision announcement.
• After picking up from session lows through mid-afternoon London trade, EGB yields pulled back led by the front-end in response to the MNI Policy Team's latest sources piece, "MNI SOURCES: ECB Likely To Wait Till December Before Next Hike" which saw the implied probability of an October hike quickly pull back ~3bps or so to 13bps.
• On the day the German curve twist steepened, with the UK's bear steepening. We note 10Y Bund yields hit fresh cycle highs (3.573%) before fading slightly; UK 10s remained within the prior session's ranges though posted a fresh post-2007 high close.
• Periphery/semi-core EGB spreads widened modestly.
• UK inflation data will be Wednesday's early highlight (MNI UK CPI and labour market preview here), with the Federal Reserve decision taking centre stage after the European cash close.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.6bps at 3.257%, 5-Yr is up 1.7bps at 3.351%, 10-Yr is up 2bps at 3.538%, and 30-Yr is up 3.4bps at 3.892%.
• UK: The 2-Yr yield is up 0.2bps at 4.891%, 5-Yr is up 1bps at 4.964%, 10-Yr is up 2.1bps at 5.388%, and 30-Yr is up 3.1bps at 5.925%.
• Italian BTP spread up 1.3bps at 88bps / Spanish up 0.7bps at 47.2bps 

• +8,000 SFRX6 96.25 calls, 1.25 at 1155:48ET, adds to some +30,000 bought earlier

• RES 4: 109-07   61.8% retracement of the Jun 30 - Jul 31 bear leg
• RES 3: 108-27+ High Aug 13
• RES 2: 108-03   50-day EMA
• RES 1: 106-19/107-13+ High Sep 11 / 20-day EMA 
• PRICE:‌‌ 105-30+ @ 16:58 BST Sep 15
• SUP 1: 105-21   Low Sep 15
• SUP 2: 105-10+ Low Oct 19 2023 (cont.)
• SUP 3: 105-00+ 2.382 proj of Jun 30 - Jul 14 - 17 price swing
• SUP 4: 104-25+ 2.500 proj of Jun 30 - Jul 14 - 17 price swing

The downtrend in Treasuries is intact and the contract has traded to a fresh cycle low. The steep sell-off last week and fresh cycle lows this week, highlights a strengthening of the bear leg. The move down keeps cycle lows in play and of particular interest given that in yield terms, the psychological 5% level has been breached. Sights are on 105-10+, a Fibonacci projection. Initial firm resistance is at the 20-day EMA at 107-13+.