Analysis details (20:59)

Sustained Treasury bear-flattening and one-way selling as Friday's CPI reaction extends into Wednesday's FOMC. 2s +29.9bps at 3.348%, 3s +28.1bps at 3.506%, 5s +24.8bps at 3.501%, 7s +23.6bps at 3.476%, 10s +22.2bps at 3.379%, 20s +19.5bps at 3.645%, 30s +17.4bps at 3.372%. 5yr TIPS +41.1bps at 0.388%, 10yr TIPS +26.2bps at 0.637%, 30yr TIPS +21.2bps at 0.884%. 5yr BEI -2.5bps at 3.138%, 10yr BEI -2.6bps at 2.723%, 30yr BEI -2.3bps at 2.519%.

THE DAY: The Tokyo session Monday picked up where the US closed last week, with selling in bonds picking up as APAC players reacted to Friday's multi-decade high US CPI reading. The bond selling saw 10yr JGBs test the BoJ's 0.25% top-end yield target range. High volume selling extended through Europe, with fixed income and equities selling in unison amid "stagflation" woes in play, particularly after the bleak UK GDP, IP and Output metrics. The US session provided little catalysts to alter the trend (no data releases , with selling momentum carrying right into settlement, and then again in late trade on a WSJ piece noting the higher likelihood of a 75bps rate hike this week - not explicitly citing Fed sources, but eerie nonetheless).

AHEAD: No Treasury coupon auctions this week but FOMC serves the highlight. On the US data front, PPI on Tuesday, Retail Sales and Import prices on Wednesday, and Philly Fed Mfg. on Thursday. Globally, Chinese production data Wednesday is on watch, while the BoE and SNB Thursday could provide some transatlantic pressures, ahead of the BoJ on Friday.


13 Jun 2022 - 20:59- Fixed IncomeResearch Sheet- Source: Newsquawk

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