US TSYS: TYH6 Starts To Probe Resistance With CPI Eyed

Treasuries have extended yesterday’s second half gains overnight, pushing higher through Asia and European hours with crude oil futures also pulling back 1.5% from late yesterday highs. Today’s docket is headlined by a potentially messy US CPI report with scope for spillover from BOE and ECB decisions beforehand. It will also be followed by the BOJ late tonight with a rare hike expected. 

• Cash yields are 1-3bps lower on the day, with declines led by the belly.
• A mixed day so far for curves, with 2s10s dipping to 66.9bps (-0.3bp) vs 5s30s at 114.6bps (+1.5bp) having come close to testing three-month highs of 115.1bps after payrolls on Tuesday.
• Tuesday’s 69.6bps for 2s10s had started to eye the April high of 73.8bp for its steepest since early 2022.
• TYH6 trades close to session highs of 112-22 (+06) as it starts to probe resistance at 112-22+ (Dec 16 snap high on payrolls which also met the 50-day EMA) and 112-23 (Dec 11 high) before 112-27+ (Dec 5 high). Clearance here would strengthen a short-term bull cycle as it moves further away from the bear threat at 111-29 (Dec 10 low).
• Data: CPI Nov w/ partial Oct data (0830ET), Real avg earnings Nov (0830ET), Weekly jobless claims (0830ET), Philly Fed mfg Dec (0830ET), KC Fed mfg Dec (1100ET), Dallas Fed weekly economic index (1130ET), TIC flows Oct (1600ET)
• Fedspeak: Goolsbee on Fox Business (1025ET), Goolsbee on PBS NewsHour (1800ET)
• Coupon issuance: US Tsy $24B 5Y TIPS re-open - 91282CPH8 (1300ET)
• Bill issuance: US Tsy $80B 4W & $80B 8W bill auctions (1130ET)
• Politics: Trump signs executive order (1330ET), Trump signs National Defense Authorization Act (1800ET)