MEXICO: November Industrial Production Beats Expectations

• MNI: BRAZIL NOV FINAL IPCA +0.18% M/M

• MNI: US MBA: MARKET COMPOSITE +4.8% SA THRU DEC 05 WK

Treasuries are off lows that were inspired by earlier EGB pressure but have still broadly extended a bear cycle that has seen a number of steps lower. Today’s focus is squarely on the FOMC decision, SEP and Powell’s press conference whilst data is headlined by the delayed ECI for Q3. 

• Cash yields are 0.3-1.1bp higher on the day, with increases led by 5s and 7s.
• 2Y yields sit at 3.621% (+0.7bp) having earlier seen 3.625% for the highest since Nov 5, Oct 30 and before that late September.
• 5s30s have slowly extended a sizeable flattening since mid-last week, at 101.3bp vs a fresh two and a half month high of 111bp on Dec 3.
• TYH6 trades at 111-31 (-04) off an earlier latest low 111-29, on reasonable cumulative volumes of 290k for an overnight session ahead of a FOMC decision.
• It has previously cleared an important short-term support at 112-07 (Nov 5 low) and opened 111-19/111-11 (Fibo projections of Oct 17-Nov5-25 price swing) after which lies the round 111-00. In the event the SEP and Powell fail to meet hawkish expectations, resistance meanwhile is seen at 112-10+ (Nov 20 low) before 112-25+ (20-day EMA).
• FOMC decision + SEP (1400ET), Powell press conference (1430ET)
• Data: Weekly MBA mortgage data (0700ET), Employment Cost Index Q3 (0830ET – shutdown catch-up), Monthly Treasury Statement (1400ET)
• Bill issuance: US Tsy $69B 17W bill auction (1130ET)
• Politics: Trump participates in roundtable (1400ET), Trump greets pastors (1700ET)