Bond Traders Weekly Outlook: US Treasury Auctions Outperform Ahead of FOMC

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    U.S. Treasuries modestly lower start with longer tenors expected to pace the early selling.

    Overnight action very limited, considering markets in China, Hong Kong, South Korea, and Singapore were closed for Lunar New Year celebrations and will remain closed tomorrow. Action in Europe has also been on the subdued side.

    Most notably, a couple ECB policymakers continued speaking about the need for more rate hikes. Economic data during the U.S. session will be limited to the 10:00 ET release of the Leading Index for December (consensus -0.7%; prior -1.0%).

    Crude oil has climbed past last week’s high to a level not seen since early December while the U.S. Dollar Index is down 0.1% at 101.93.

    2-yr: -2 bps to 4.18%
    3-yr: UNCH at 3.84%
    5-yr: +1 bp to 3.58%
    10-yr: +2 bps to 3.50%
    30-yr: +2 bps to 3.68%


    Treasury yields are climbing off earlier lows.
    The 2-yr note yield is up one basis point to 4.24% and the 10-yr note yield is flat at 3.51%.

    U.S. Treasuries are on track for a higher start after three days of losses. The overnight session was quiet once again, as many markets in Asia remained closed for Lunar New Year celebrations.

    Japan’s Manufacturing PMI remained in contraction for the third consecutive month in the flash reading for January, reaching its lowest level since late 2020.
    Flash Manufacturing and Services PMI readings for the eurozone improved from their December levels, but Manufacturing PMI remained below 50.0, indicating continued contraction in the sector.

    The U.S. Treasury will kick off this week’s note auction slate with a $42 bln 2-yr offering.

    The U.S. Dollar Index is down 0.1% at 102.09.

    2-yr: -1 bp to 4.22%
    3-yr: UNCH at 3.89%
    5-yr: -2 bps to 3.61%
    10-yr: -2 bps to 3.51%
    30-yr: -1 bp to 3.68%


    U.S. Treasuries higher start, looking to build on yesterday’s gains.

    Trading volume during the Asian session improved a bit as South Korea and Singapore reopened, but action remained on the light side due to continued closures in China and Hong Kong. The market received a limited set of data, but it is worth noting that Australia’s CPI was up 7.8% yr/yr in Q4, representing the sharpest rate of growth since 1990.

    In Europe, expectations for a Bank of England rate cut before the end of the year are on the rise after the release of cooler than expected PPI figures for December.

    The U.S. Treasury will sell $43 bln in 5-yr notes this afternoon.

    2-yr: -5 bps to 4.14%
    3-yr: -4 bps to 3.82%
    5-yr: -4 bps to 3.54%
    10-yr: -5 bps to 3.42%
    30-yr: -4 bps to 3.58%


    U.S. Treasuries are on track for a lower start after a steady retreat in the overnight futures market.

    Japan’s Tokyo Core CPI increased at its fastest pace since May 1981, but Prime Minister Kishida said that inflation driven by domestic demand remains “feeble” and that a return to deflation should not be ruled out.

    Action in Europe has been underscored by continued hope that the region will avoid a recession after Spain reported better than expected growth for Q4.

    2-yr: +5 bps to 4.22%
    3-yr: +4 bps to 3.92%
    5-yr: +5 bps to 3.64%
    10-yr: +6 bps to 3.55%
    30-yr: +4 bps to 3.67%


    U.S. Treasuries pulled back for the second consecutive day on Friday, resulting in a mixed finish for the week. Inflation watchers saw a milder PCE as
    [See the full post at: Bond Traders Weekly Outlook: US Treasury Auctions Outperform Ahead of FOMC]

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