Bullard Puts 4 ’22 Hikes On The Table

TYH2 -0-05+ at 128-13, operating around late NY levels.

• The major cash Tsy benchmarks finished Wednesday trade 0.5-3.5bp cheaper. 2s led the way lower, with the 7- to 10-Year area of the curve lagging the broader sell off.
• Fresh pressure crept in late in the day, after a WSJ interview with St. Louis Fed President Bullard saw the ’22 FOMC voter note that four interest rate rises in 2022 now appear likely.
• Elsewhere, Fed Vice Chair in waiting Brainard noted that inflation is too high (underscoring the central bank’s recent pivot in the release of the initial text from her upcoming testimony on the hill), while the remainder of the text largely echoed comments made by Chair Powell earlier in the week.
• Higher crude oil prices provided a further source of pressure for the space.
• Earlier in the day, CPI data was largely in line with wider expectations, which allowed the space to richen a touch given the recent hawkish Fed repricing and greater degree of worry attached to an upside surprise/short market positioning.
• 10-Year supply wasn’t particularly firm, tailing by 0.3bp, while the cover ratio held around the recent averages. Dealer takedown edged upwards, topping its own recent average, but remained below 20%.
• PPI and weekly jobless claims data headline the NY economic docket on Thursday. Elsewhere, Fedspeak will come from Brainard (as she delivers the aforementioned testimony in DC), Barkin & Evans.