US TSYS: Treasuries Modestly Lower Ahead of CPI

Schatz Block trade, suggest buyer:

• DUH5 ~4.13k at 106.525.

OI data suggests that net short setting in TY futures provided the most notable DV01 equivalent swing during Friday’s sell off, although all of the DV01 equivalent moves were fairly modest.

• A mix of net short setting and long cover was seen across the curve.

The US Commerce Department issued new export controls to curb China's access to AI-related tech via third countries. The new rule will create a global licensing system for advanced AI technology exports, partially, or totally, restricting US firms from exporting to non-allied or adversarial countries. The rule comes into effect in 120 days, providing President-elect Donald Trump time to assess the measures. 

• Axios reports: “The Export Control Framework for AI Diffusion is the Biden administration's final swing at China's AI industry," and follows a major package of sanctions on Russia’s energy sector package on Friday. The announcements signal Biden's intent to use executive tools to pursue foreign policy objectives before Trump takes office next week.  
• Reuters notes the rules, "go beyond China and are aimed at helping the U.S. keep its dominant status in AI by controlling it around the world.”
• US Commerce Secretary Gina Raimondo: "The U.S. leads AI now - both AI development and AI chip design, and it's critical that we keep it that way,"
• White House National Security Adviser Jake Sullivan: "The U.S. has to be prepared for rapid increases in AI's capability in the coming years, which could have transformative impact on the economy and on our national security,"
• A former Biden administration economic official told the Washington Post: “This is definitely a departure from how we’ve thought about technology since the early 1990s… [It is] more consistent with the way we thought about the role of technologies … during the Cold War.”