STIR: Some Buying Off Lows Post-Auction But Still Very Heavy Losses On The Day
* US rates briefly extended to new cycle lows on the very weak 5Y auction although have more than reversed the latest push lower. * They're still as much as 23 ticks lower on the day out in 2028 contracts. * The peak implied yield sits at 4.91% (pushing out to the Z7 after some time at the U7) having earlier hit a new cycle high of 4.95%, having ended August at 4.275%. * There have been a confluence of factors today including crude oil futures unwinding yesterday's heavy decline, reports of a 90-day US export ban which analysts warn could raise and not lower domestic prices and then strong PMIs, first in the Eurozone and then especially the US. * See the below chart for how the magnitude of today's reaction since the US PMIs has exceeded the combined reaction to the hawkish FOMC SEP and Warsh's press conference from the reds onwards. * FF cumulative hikes from 3.88% effective: 18.5bp Oct, 38bp Dec, 50bp Jan 2027, 68bp Mar, 77.5bp Apr and 88bp Jun.
* US rates briefly extended to new cycle lows on the very weak 5Y auction although have more than reversed the latest push lower. * They're still as much as 23 ticks lower on the day out in 2028 contracts. 275%. * There have been a confluence of factors today including crude oil futures unwinding yesterday's heavy decline, reports of a 90-day US export ban which analysts warn could raise and not lower domestic prices and then strong PMIs, first in the Eurozone and then especially the US.
* See the below chart for how the magnitude of today's reaction since the US PMIs has exceeded the combined reaction to the hawkish FOMC SEP and Warsh's press conference from the reds onwards. 5bp Apr and 88bp Jun.