The market settles forward of CPI and the FOMC however 10-year be aware public sale to return

It’s good to be back. I dealt with a family matter for the past week or so but all is well now and I have one day to get back into the full swing of things ahead of tomorrow’s huge day: CPI and the FOMC.

The highlight today is a $39 billion 10-year
reopening. There is a bid in fixed income so far today on French political uncertainty, lowering 10s by 3.2 bps to 4.437%.

Yesterday, a three-year auction tailed by 1.1 bps and that has been the story over and over again the past couple months. It’s also understandable that investors wouldn’t be too eager to establish positions today ahead of CPI and the FOMC, so that’s all the more reason to expect a soft response. That said, maybe it would also be a reason for the broader market to ignore a poor result.

Another reason to expect a weak auction is that just one of the past 16 reopening auctions have stopped through — marginal buyers seem to prefer the cash market.

Otherwise, we will continue to ponder political developments and tee up the CPI report.