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Assessing The Latest Bout Of Twist Flattening


T-Notes having a look through Friday's highs in early trade after going out around best levels of the day come the end of the final trading session of last week. Contract last +0-04+ at 132-14+.

  • The aggressive twist flattening of the curve continued on Friday, withs 2s cheapening by 4.5 bp, while 30s richened by 8bp, the pivot point was in the belly of the curve, with 7s ultimately little changed on the day.
  • Hawkish comments from St. Louis Fed President Bullard (a '22 FOMC voter) applied pressure to the front end of the curve during the NY morning. Bullard noted that his dots (in the SEP) see a rate liftoff in late 2022, while he suggested that Chair Powell officially opened the discussion on tapering. Bullard was also concerned about feeding into what he deemed "housing froth", while "leaning toward the idea that the Fed may not need to be in MBS." Later in the day noted dove (Minneapolis Fed President) Kashkari ('23 FOMC voter) stressed that he wanted to keep rates near zero at least through the end of '23 to allow the U.S. labor market to return to its pre-COVID strength
  • News flow has been fairly light over the weekend. There is nothing in the way of tier 1 risk events slated during Monday's Asia-Pac session, with this week's domestic focus set to fall on the raft of post-blackout Fedspeak & Friday's PCE print.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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