A Touch Cheaper On The Day, Familiar Steepener Flow Seen

Tsys remain a little softer on the day, although moves in European peers have been more pronounced, with CPI readings from the continent front and centre thus far.

• Cash Tsys run 1.5-2.5bp cheaper across the curve, while TYZ3 is -0-04, off lows of a contained 0-09+ range..
• Musings from U.S. Commerce Secretary Raimondo re: China underscored the importance of the restart of communications, while stressing the lack of setbacks in discussions. There hasn’t been much in the way of tangible process made, although the initial thawing of Sino-U.S. relations has been a positive in recent months.
• Flow has seen a FV/US block steepener (+8,020/-2,500) for the second time in as many London sessions, with similar size deployed at around the same time of day on both occasions.
• FOMC-dated OIS is incrementally firmer on the day but holds the bulk of yesterday’s data inspired dovish repricing. Terminal policy rate pricing shows at 5.46% (come November), before 46bp of cuts are priced through June ’24.
• German CPI readings will continue to garner interest, while the highlights of the NY docket include ADP employment data, secondary Q2 GDP/PCE readings. pending home sales and MBA mortgage applications.