A Little Steeper, Higher For Longer Fed & Potential Government Shutdown Still Dominate

Cash Tsys have ticked further away from Friday’s best levels, with the major benchmarks sitting 1-3.5bp cheaper on the day and light steepening apparent.

• TYZ3 is 0-03+, 0-01+ off the low of a 0-08+ range.
• Continued focus on the higher for longer narrative/potential need for further tightening in Friday’s Fedspeak probably provided downward impetus in Asia-Pac hours.
• FOMC-dated OIS is little changed to 4bp higher through the liquid area of the curve, with steepening of the strip seen (terminal policy rate of ~5.45% seen come January, before ~35bp of cuts are priced through July).
• Elsewhere, headlines pointing to seemingly ever-increasing odds of a government shutdown continue to do the rounds.
• Regional Fed survey data headlines the NY docket on Monday, with Minneapolis Fed President Kashkari set to speak in the NY-Asia handover.