Looking at the 10-year note this morning, we have seen a narrow range of 128.265 on the downside and 128-02 on the upside while CPI came in pretty much as expected. The technical makeup of the contract looks a bit weak but is holding lows form last Friday’s payroll number of 128-21, so we could be forming an interim low. All eyes will be focused on the FOMC announcement which comes out at 1:00pm central. The Fed is widely expected to leave rates unchanged but more important will be Chairman Powell’s press conference. Traders will be scrutinizing very closely to see if Powell leans one way or another on how the economy looks and any possible future moves.
Another very important item that the treasuries will be watching for the remainder of the week is the announcement on whether Trump decides to increase tariffs on Chinese goods or not. December 15th is the day the tariffs are supposed to take effect. If Trump does go with the hike, I would expect a big move in the price of treasuries and down in yields and vice versa if there is no tariff increase. For the balance of today, I would expect very quiet price action until the announcement by the FOMC.