TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 8 TICKS HIGHER AT 107-21
Newsquawk Staff ·
T-notes rally across the curve after Waller keeps September hold in play. At settlement, 2-year -3.7bps at 4.334%, 3-year -3.1bps at 4.405%, 5-year -2.5bps at 4.511%, 7-year -2.4bps at 4.627%, 10-year -1.6bps at 4.764%, 20-year -2.0bps at 5.244%, 30-year -1.6bps at 5.244%.
THE DAY: The Treasury curve bull steepened on Thursday, predominantly in response to a dovish set of remarks from Fed Governor Waller.
Governor Waller said he would support holding the policy rate steady at the September FOMC if the August inflation data, due next week, shows continued progress. In the Q&A, he added that the Fed can afford to wait one meeting to give disinflation a chance. The remarks saw money markets move back towards a 50/50 split between a September hike and hold, unwinding some of the hawkish repricing seen after Chair Warsh last week, when he said the Fed has more work to do unless officials are confident underlying inflation is moving towards the 2% goal. Markets had priced a near-70% probability of a September hike earlier this week following Warsh's remarks and the latest US-Iran escalation. Although Waller's comments were dovish, his view remains heavily dependent on next week's inflation data; he warned that a hot print could warrant a rate hike, but said he is optimistic on inflation and is seeing signs of disinflation.
Elsewhere, oil prices extended recent gains, perhaps limiting some of the rally in Treasuries, amid reports that the Houthis had launched a large-scale offensive on multiple fronts along the western coast, according to Sky, citing sources. Meanwhile, Oman reportedly rejected Iran's request to jointly charge service fees on commercial ships passing through the Strait of Hormuz, following threats from US President Trump.
Away from Waller, US data saw the ISM Services PMI beat expectations, although the prices component accelerated while employment was little changed. Jobless claims remained low, while Challenger layoffs accelerated and the US trade deficit widened, albeit by slightly less than expected.
Attention now turns to Friday's Nonfarm Payrolls report for further direction on September Fed expectations, before the focus shifts to US CPI and PPI next week.
Notes
- US to sell USD 58bln of 3-year notes on September 8th, USD 39bln of 10-year notes on September 9th and USD 22bln of 30-year bonds on September 10th; all to settle September 15th
Bills
- US sold 4-week bills at a high rate of 3.700%, B/C 297x; sold 8-week bills at a high rate of 3.750%, B/C 3.02x
- US to sell USD 75bln of 6-week bills, USD 92bln of 13-week bills, USD 79bln of 26-week bills, on September 8th; all to settle Sept 10th.
STIRS / OPERATIONS
- Fed Hike Pricing via CME FedWatch: Sept 12.6bps (prev. 16.1bps), Dec 32.5bps (prev. 38.4bps).
- EFFR at 3.63% (prev. 3.63%), volumes at USD 114bln (prev. USD 114bln) on September 2nd
- SOFR at 3.65% (prev. 3.66%), volumes at USD 2.882tln (prev. USD 2.912tln) on September 2nd
- NY Fed RRP op demand at 0.70bln (prev. 0.53bln) across 4 counterparties (prev. 1) on September 3rd
- Treasury Buyback [Cash management, 1mth to 2yr, max USD 12.5bln]: Accepts USD 12.5bln of 28.272bln offers; Accepts 24/45 eligible issues
- Week in Focus 26-30th October 2026: FOMC, BoC, RBNZ, ECB, BoJ Policy Decisions, US PCE
- Newsquawk Weekly Economic Release 26th - 30th October 2026
- Newsquawk European Market Wrap - 23rd October 2026
- US EQUITY OPEN: Breadth poor at the open: Energy leads gains on oil rally, Tech sees slight bounce
- Daily US Equity Opening News: SPCX explores access to 80K US cell sites; OpenAI nears USD 30bln funding at $1.25T valuation
Related headlines
- US President Trump expected to remove some tariffs on Canada in a bid to help Senator Susan Collins, WSJ reports49 min ago
- US President Trump says they are "very close" to a deal with Mexico. Canada is working hard to make a deal.3 hours ago
- US President Trump says he discussed the North Sea with the UK PM. Conversation also include Iran and Ukraine.3 hours ago
- US President Trump says "we could end the Iran war very quickly", adds "do we want to finish it or let it within is the question"3 hours ago
- US President Trump is set to speak with UK PM Burnham this afternoon on the Russia-Ukraine situation, BBG reports3 hours ago
- The Trump administration plans to introduce voluntary “US Caught Seafood” labels to help consumers identify seafood origins, according to CBS2 hours ago
- White House says First Lady Melania Trump successfully secured a ceasefire between Russia and Ukraine, localised to the city of Oleshky5 hours ago
- Russia's Kremlin says Russian and Ukrainian militaries are working to determine dates for ceasefire talks3 hours ago
- US Ambassador to Turkey Tom Barrack says US could strike Iran as soon as this weekend, AFP reports citing an interview on Israeli radio1 hour ago
- Japan is considering classifying energy and AI spending as defence expenditure amid pressure from the Trump administration to increase military budgets, according to Nikkei2 hours ago
- Senior Ukrainian Official says that a ceasefire in Russian-occupied Oleshky is to be established soon3 hours ago
- US President Trump says if there is still a problem with Starlink in Ukraine, then he will sort it3 hours ago
- Algeria has instructed producers of urea fertiliser to stop supplying France, according to reports; France has raised Algerian trade curbs at EU level5 hours ago
- Iran has developed plans to target undersea communications cables in the Gulf if the US and Israel launch further attacks, according to two officials speaking to Reuters1 hour ago
- Eni (ENI IM) expected to sign infrastructure contracts worth up to USD 1.8bln for a gas project in Cyprus in the coming days, according to the WSJ3 hours ago