Forex - US Bond Flows: firm PPi keeps short end propped

 12:36 (GMT) 13 Jun

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Stronger than expected PPI data (though ex food/energy/trade a more subdued 0.1%) enough to help keep short end yields propped as the market plays to its natural inclination towards slightly defensive into an FOMC, especially one where a hike is all but guaranteed. Ultimately though follow through lacking after the initial headline pop and it is hard to see the market breaking out of very narrow trade now into the meeting

Forex - US Bond Flows: steady post supply, pre-CPI, Fed

 10:10 (GMT) 12 Jun

USTs remain in something of a holding pattern, 10s barely trading 3bp over the last couple of days so far, the US-N.Korea summit not provided much input. Yesterday's smoothly taken supply added to the s/t balance as the market waits on the next inputs, with CPI data this morning the last notable input ahead of the FOMC. Our economists are biased to the low side of 0.2% on core unrounded which after the weak Apr print would leave a soft recent trend in place and so ought to further help cap yields. A downside surprise to 0.1% rounded could prompt a bit of an intraday squeeze, T.note to the 100dma.

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