A Touch Firmer Early On, PCE Due Before Long Weekend

Generally firmer than expected UK retail sales data and some related weakness in Bunds fail to feedthrough into Tsys, with the major benchmarks operating around firmest levels of the session post-data.

• That leaves Tsys 1-2.5bp richer across the curve with some light outperformance in the belly, while TYM3 is +0-00+, 0-01 off the peak of its 0-06 rnage. Cash trade will be curtailed today (SIFMA recommend a 14:00 NY/19:00 London close) owing to the observance of the Memorial Day holiday on Monday.
• House Speaker McCarthy has warned that there is no agreement on the debt ceiling, although he will continue working at the Capitol over the long weekend, stressing that he will continue until the job is done. We also saw a BBG source report note that “Republican and White House negotiators are moving closer to an agreement to raise the debt limit and cap federal spending for two years.”
• The PCE data suite headlines the NY docket ahead of the long weekend, with preliminary durable goods, the final UoM survey reading and inventory prints also slated.
• FOMC-dated OIS is off yesterday’s hawkish extremes, showing 11bp of tightening for the June FOMC, 21.5bp of cumulative tightening through July, followed by ~37bp of cuts by year-end.