US TSYS: Tsys Yields Lower Following Trump Comments, Curve Steepens
Jan-24 04:48
- Tsys futures are trading near session highs, with the short-end outperforming. TU is trading above yesterday's highs, last +01¼ at 102-24+, just off session highs of 102-25. TY is +03 at 108-15, however the trend remains bearish, the contract did trade through the 20-day EMA, at 108-17+ during the week which does expose 109-06, the Dec 31 high, and 109-15, the 50-day EMA, with a clear break of the 50-day average needed to strengthen a bullish theme. The bear trigger is unchanged at 107-06, the Jan 13 low.
- Tsys rallied as the second part of the Trump interview on Fox aired, with particular focus on comments he made around not wanting to have to impose tariffs on China, and that Trump & Xi had good discussions.
- Cash tsys yields are just off session lows, with curves bull-steepening. The 2yr is -3bps at 4.259%, while the 10yr is -1.6bps at 4.268%. The 2s10s curve is +1.5bps at 36.380, after rising 5bps on Thursday.
- Overnight in tsys options, demand emerged during US afternoon for bullish plays targeting a 10yr yield move back toward 4% within a couple of months, while in SOFR options early flows included upside position in the Dec25 tenor, targeting an additional 100bp of rate cuts on top of current market pricing for Fed policy this year.
- Today we have S&P Global US Manufacturing PMI, U. of Mich. Sentiment & Existing Home Sales
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