[MARKET ANALYSIS] T-note futures take a breather after advancing as yields declined alongside lower oil prices and softer PPI data
USTs: +1.5 ticks
- Took a breather after advancing yesterday as yields declined alongside lower oil prices and softer-than-expected US PPI data, while Fed's Goolsbee had also commented that a prolonged Iran war reduces the chances of rate cuts and they may have to wait until 2027 to lower rates.
Bunds: +25 ticks
- Holds on to recent gains but with further upside capped overnight ahead of several ECB speakers and with Bund issuances scheduled later.
JGBs: +1 tick
- Price action is stuck around the 130.00 focal point with demand contained following stronger-than-expected Machinery Orders, lower oil prices and a recent BoJ source report that the central bank is considering a sharp increase to its price forecast this month.
Context
Today's softer-than-expected PPI data has contributed to a pullback in Treasury yields, providing some relief to T-note futures that had been advancing. This dynamic, along with lower oil prices, suggests a temporary easing of inflation pressures, which could influence market expectations around future Fed rate cuts, especially given comments from Fed officials about potential delays in rate adjustments.
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