US TSYS: Nudge Richer As Markets Monitor Peace Deal Progress

TYU6 is dealing at 109-00, 0-00+ from closing levels in today's Asia-Pac session.

• Cash US tsys are ~1bp richer in today's Asia-Pac session after finishing Monday's session showing a modest bear-steepener, with benchmark yields 1-4bps higher. Markets are monitoring progress of an agreement between Iran and Israel.
• Traders have resumed pricing in a quarter-point Fed hike by year-end due to a stronger-than-expected labour market and higher inflation. The focus is on May CPI data on Wednesday.
• Hidden PDF: Monthly Moderation But Still Too High. Monthly inflation is expected to moderate to a still elevated pace in May, with MNI unrounded consensus pointing to 0.51% M/M for headline CPI and 0.23% M/M for core CPI. It should see headline CPI jump further to 4.2% Y/Y with a risk of 4.3% (either strongest since Apr 2023) whilst core CPI would see a more modest acceleration to 2.8-2.9% Y/Y (strongest since Sep 2025).
• MNI Techs: Treasuries reverse course to largely weaker again, low end of session range: TYU6 trades -2 at 109-00.5 vs. 108-25 overnight low - initial technical support. The bear trigger lies at 108-08+, the May 19 low. Clearance of this level would confirm a assumption of the downtrend.