A Fresh Extreme For 2s10s As Bullard Maintains Hawkish Tone

TYZ2 operates around late NY levels, last dealing flat vs. settlement at 112-20.

• Benchmarks yields were 3.5-9.5bp higher come the close on Thursday, with bear flattening in play as the space went out around session cheaps.
• Pre-NY trade was dominated by reaction to the UK fiscal statement and the burden facing the UK in the coming years, with the government striking a very different tone to that seen in the “mini” budget provided by the former Chancellor & PM just 2 short months ago.
• Hawkish Fedspeak then added some pressure during the NY session, with Bullard (’22 voter), pointing to the need for rates of at least 5.00-5.25%, taking most of the limelight. Bullard also alluded to a restrictive zone of 5-7% for the Fed funds rate in his presentation.
• The 2-/10-Year yield curve registered another cycle extreme when it comes to the degree of inversion witnessed.
• The Asia-Pac docket is light, with nothing in the way of tier 1 risk events slated. Chair Powell, Williams & Daly will speak during the Asia-Pac session, although that round of commentary will be focused on commending outgoing Chicago Fed President Evans, with monetary policy not set to be on the agenda.
• Further out, NY hours will bring existing home sales data and Fedspeak from Collins.