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Building On Hawkish Fedspeak Ahead Of Powell Tomorrow

  • Eurodollars extend to session lows across most of the curve, remaining up to 2 ticks richer on the day out to the Jun’23 but 2-3.5bps cheaper further out the curve, fading the IMF potentially revising its China economic forecast lower.
  • German CPI spillover was behind both the earlier rally and then subsequent reversal, which combined with increased corporate issuance has set the trend tone for most of the rest of the session that has helped build on yesterday’s more hawkish Fedspeak ahead of Powell tomorrow.
  • It chips away at inversion levels but doesn’t wildly change the picture: EDM3/Z3 at -0.41, EDZ3/Z4 -1.22 pushes a bit further off record lows and ED2/6 nudges up to -0.765.

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