Asia To Assess Bull Steepening

TYU2 deals around late NY levels, last +0-01 at 118-28.

• The cash Tsy curve bull steepened on Thursday, with the major benchmarks running 1.5-8.5bp richer come the close.
• Early London trade saw some weakness for Tsys as spill over from German FI trade, linked to the latest round of comments from ECB Executive Board member Schnabel, was apparent. Tsys then regained some pose ahead of NY dealing, moving away from session cheaps, registering fresh session highs in the process. Note that tightening in long end swap spreads was seen as a contributor to the NY morning richening.
• There was some data inspired vol. linked to a better than exp. headline Philly Fed survey reading, while both weekly and continuing jobless claims were lower than exp. Later in the day, existing home sales data was softer than expected, with the leading index printing virtually in line with exp.
• Fedspeak saw St. Louis Fed President Bullard (’22 voter) point towards the need for a 75bp hike in Sep, while Minneapolis Fed President Kashkari (’23 voter) underscored the central bank’s commitment to taming inflation. Kansas City Fed President George (’22 voter) stressed it was too son to declare victory in the fight against in inflation, flagging the need for continued tightening, while noting uncertainty re: the terminal rate of the current cycle. Finally, comments from San Francisco Fed President Daly (’24 voter) were a rehash of her recent musings, flagging debate between the need for a 50-75bp step at next month’s FOMC.
• The net impact of the data releases and Fedspeak resulted in the aforementioned bull steepening, with the shorter end of the curve printing firmest levels of the session into the bell.