Bonds Near Post-ECB Highs

Treasury futures trade stronger after the bell, see-sawing in relative narrow range since surging higher in midmorning trade; 30YY currently -.0338 at 4.1042% vs. 4.0571% L/4.2033% H.

• Impetus largely after ECB policy annc: though in-line w/ expected 75bp rate hike, markets fixated on discussion over ECB forward rate guidance turns dovish (though ECB Lagarde admits job of normalizing rates not finished, did not discuss QT).
• Not as striking as Wed's less than expected 50bp hike from the BOC, but US markets nervous over additional 75bp rate hikes going into year-end, are eager to take the cue and (continue) to unwind restrictive expectations into year end.
• As noted Wed, foreign central bank decisions unlikely to sway the FOMC, particularly next wk's annc where 75bp is considered a lock. Fed Chairman Powell likely to push back on less hawkish rate hike optimism and reiterate Sep messaging/DOT plot guidance. (Reminder: next employment report (covering October) is on November 4 - after the FOMC. An in-line read will likely tip the scales back toward 75bp hike in Dec).
• Data roundup: Tsys pared losses after round of mixed to in-line data: Q3 GDP better than exp (+2.6% vs. +2.4% est), core PCE and weekly jobless claims largely in-line (continuing claims higher 1.438M vs. 1.390M est), durable goods weaker than exp (0.4% vs. 0.6% est).
• Tsys dip/pare gains slightly after $35B 7Y note auction (91282CFT3) tails: 4.027% high yield vs. 4.017% WI; 2.43x bid-to-cover vs. 2.57x last month.