US TSYS: TYH6 Bullish Phase Intact Ahead Of January CPI
Treasuries have seen a modest paring of yesterday’s gains driven by risk-off stemming from AI and precious metal space, in moves that have seen a temporary drop below 4.10% 10Y yields. Near-term attention is now firmly on today’s January CPI report including annual seasonal adjustment revisions.
- Cash yields are 1.1-1.7bp higher across the curve.
- The 10Y yield opened at a new recent low of 4.0942% after tentatively clearing 4.10% yesterday, but has since lifted to 4.112%. Having last been sub-4.10% on Dec 5, that 4.10% level had then provided decent support on multiple occasions through December.
- TYH6 trades at 112-24+ (-01) on strong cumulative overnight volumes of 435k, pulling back off a latest high of 112-28 seen early in Asia trade before keeping to narrow ranges.
- It has breached resistance at 112-25 (61.8% retrace of Nov 25-Jan 20 bear leg) to open a key short-term resistance at 112-31 (Dec 18 high).
- Some yield-focused resistance to also bear in mind, 10Y yields at 4.10% equate to 112-27 and 4.05% to 113-04+.
- NY Fed’s deputy SOMA manager Remache reiterated yesterday (link) the Fed will continue its balance-sheet expansion with $40bn of securities per month until mid-April when it will likely be reduced substantially. That’s a continuation of Dec 10 statement (link) that: “The Desk anticipates that the pace of RMPs will remain elevated for a few months to offset expected large increases in non-reserve liabilities in April. After that, the pace of total purchases will likely be significantly reduced in line with expected seasonal patterns in Federal Reserve liabilities.”
- Data: CPI Jan (0830ET), Real av earnings Jan (0830ET)
- Politics: Trump delivers remarks to Fort Bragg military families (1330ET)
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EGB SYNDICATION: Ireland 10-year Jun-36 : Launched
- Size: E5bln (above MNI's E3-4bln expectation)
- Books closed in excess of E43bln (inc E2.2bln JLM interest)
- Spread set: MS + 26bp (guidance was MS +28bps area)
- Coupon: Short first
- Maturity: 18 June 2036
- ISIN: IE000O6GBYC9
- Bookrunners: Barclays (B&D/DM), BofA Securities, Cantor Fitzgerald Ireland, Goodbody, J.P. Morgan and NatWest
- Settlement: 21 January 2026 (T+5)
- Timing: Allocations and pricing to follow
From market source / MNI colour
POLITICAL RISK: Trump-Anything Less Than Greenland In US Hands 'Unacceptable'
US President Donald Trump posts on Truth Social: "The United States needs Greenland for the purpose of National Security. It is vital for the Golden Dome that we are building. NATO should be leading the way for us to get it. IF WE DON’T, RUSSIA OR CHINA WILL, AND THAT IS NOT GOING TO HAPPEN! Militarily, without the vast power of the United States, much of which I built during my first term, and am now bringing to a new and even higher level, NATO would not be an effective force or deterrent - Not even close! They know that, and so do I. NATO becomes far more formidable and effective with Greenland in the hands of the UNITED STATES.
Anything less than that is unacceptable. Thank you for your attention to this matter! President DJT"
- Later today, US VP JD Vance and Secretary of State Marco Rubio are set to meet with Danish Foreign Minister Lars Lokke Rasmussen and Greenlandic Foreign Minister Vivian Motzfeldt at the White House to discuss the tense situation.
- Political figures from Denmark, Greenland, NATO and the EU have all sought to reaffirm Greenland's position as a part of the Danish kingdom, and that any US military action in a fellow NATO member would be unacceptable. However, this has done little (if anything) to temper rhetoric from the White House.
- Legislation submitted to the US Congress intended to stop the US from operating militarily in other NATO states is seen as unlikely to become law.
STIR: Modest Dovish CPI Impact Maintained Ahead Of Important Docket
- Fed Funds implied rates are as much as 2bp lower for end-2026 meetings, unwinding a small increase late yesterday to marginally extend a modest dovish move on yesterday’s December CPI release.
- It’s ahead of an important docket with data highlighted by two months of PPI for Oct-Nov and Nov retail sales, six Fedspeakers scheduled and a potential SCOTUS ruling on IEEPA tariffs (1000ET most likely if there is one).
- FF cumulative cuts from 3.64% effective: 1bp Jan, 7bp Mar, 11.5bp Apr, 25bp Jun, 43bp Sep and 54.5bp Dec.
- SOFR futures are up to 2.5 ticks firmer in 2H27 contracts, with a terminal implied yield of 3.145% (H7, -2bp) easing back further from Monday’s highest close since the Dec FOMC (3.19%).
