US DATA: Little Reaction To Stronger Preliminary U.Mich 5-10Y Inflation Exp.

10-Year gilt/Bunds is ~3bp wider, as the spread continues to oscillate either side of 190bp.

• Zooming out, the multi-week range remains intact, with gilt bears unable to force a break above 200bp during a test back in July. The round number presents the initial meaningful upside target.
• Meanwhile, the August closing low at 184.9bp presents the initial downside area of interest.
• A hawkish round of UK labour market data (vs. expectations heading in) and last week’s BoE vote split-rhetoric combination removed some of the downside risks to the spread, although the likely slowing of BoE QT (announcement due in September) seemingly removes some widening risk.
• Elsewhere, ongoing UK fiscal fragility remains a key theme, but that is somewhat offset by German fiscal developments and related issuance risks over the medium-term.
• This has led to a relatively tight range for the spread in recent weeks.

• US Cash Treasuries are trading richer, the belly outperforms, but it is more mixed on the curves.
• The US 2s/10s is flatter, and the 5s/10s is steeper, but looking closer at the charts, these are mostly unchanged overall.
• Main initial resistance in TYU5 is at 112.15+, the August high, and highest printed level since 1st May.
• The latest round of Buying Treasury Futures could see the USDJPY drift to 147.00, so far only managed a 147.14 low.

FFV5 17.5K given at 95.930.