[MARKET ANALYSIS] Muted trade in fixed income as markets await US CPI and PPI later in the week

The muted trade in fixed income markets reflects investor indecision ahead of key US inflation data, namely the CPI and PPI, coming later in the week.

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[MARKET ANALYSIS] Muted trade in fixed income as markets await US CPI and PPI later in the week

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  • UST Futures trades rangebound in a 112'05-112'11 band as the Asia-Pac session gets underway. Earlier upside was seen following the announcement of the subpoena against Fed Chair Powell, rising from trough to peak over the space of 45 minutes, before paring back the entirety of earlier gains and currently trading flat.
  • Bund Futures follows its US counterpart, rising from the open at 127.91 to a peak of 128.02, before falling back lower. Not much on the docket today in the European session, but markets will be waiting for US CPI and PPI.
Context

Given the importance of these indicators for the Federal Reserve's policy outlook, any surprises could significantly impact market sentiment and yield curves. As such, traders are likely to remain cautious, keeping an eye on the range-bound action in UST and Bund futures as they await further direction.

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