PERU: BCRP Chief Economist Armas Sees Economy Growing 4% Y/y In January

• US TSY 10Y AUCTION: NON-COMP BIDS $229 MLN FROM $42.000 BLN TOTAL

Tsy futures are trading near late morning lows ahead of the $42B 10Y note auction (91282CMM0) at 1300ET, WI is currently at 4.626%, 5.4bp rich to last month's tail. Today's results will be available shortly after the competitive auctions closes at 1300ET.

• January auction recap: Treasury futures held weaker but off late morning lows after the $39B 10Y note auction re-open (91282CLW9) drew 4.680% high yield vs. 4.678% WI; 2.53x bid-to-cover vs. 2.70x prior (highest since Jun 2019).
• Peripheral stats indirect take-up recedes to 61.39% vs. 7.000% prior; direct bidder take-up rebounds to 22.97% from 19.50% prior; primary dealer take-up 15.64% vs. 14.70% prior.

ECB's Nagel joins a set of other ECB policymakers in downplaying the importance of the neutral rate of interest, r*, for near-term monetary policy in his lecture today in London at the 'Official Monetary and Financial Institutions Forum'. Key excerpts below:

• "The idea of the natural rate serving as a guiding star for monetary policy comes with profound challenges", citing high estimation uncertainty.
• Whilst discussing a range of different "r-stars", Nagel cites the conclusion from a recent academic paper from Prof. Ricardo Reis of: "Focusing exclusively on the return on government bonds as the measure of r-star, while neglecting the return on private capital, leads to the wrong policy advice" .
• "There is no reason to act hastily in the present uncertain environment", again steering away from an accelerated cutting cycle.
• "In my opinion, proceeding in a data-driven and gradual manner has served the ECB Governing Council well [...] Using r-star alone to navigate the monetary policy universe could be like flying almost blind. But having it as one of many instruments in your cockpit is highly useful", reiterating the well-known data dependance.