Bull Steepening Ahead Of Long Weekend

Bunds rebounding after 10-Year German yields tapped levels not seen since the initial fallout from the SVB meltdown (exactly matching the Mar 10 high) has helped put a bid into the wider core global FI space. Equity futures moving off best levels at the same time also aided that move.

• TYM3 trades +0-03+ at typing, 0-02+ off the peak of its 0-10+ range, while cash Tsys run 2-4bp richer, bull steepening.
• A quick reminder that cash Tsys will see curtailed trade today (closing at 14:00 NY/19:00 London, per SIFMA recommendations), while they are also closed on Monday (normal hours are in play for futures today, with an early close scheduled on Monday) owing to the observance of Memorial Day.
• FOMC-dated OIS is off yesterday’s hawkish extremes, showing 11bp of tightening for the June FOMC, 21bp of cumulative tightening through July, followed by ~37.5bp of cuts by year-end.
• 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.
• Fiscal headlines will also remain in focus after House Speaker McCarthy warned that there is no agreement on the debt ceiling, although he will be 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.”