Cash Bonds Open Slightly Cheaper After Yesterday’s Post-FOMC Gains

TYM4 is trading at 107-25+, -0-10 from NY closing levels.

• Cash bonds have opened in the Asia-Pac session ~1bp cheaper after yesterday’s post-FOMC rally.
• Yesterday, yields were down over double digits in post-FOMC trading before profit-taking set in. The 2-year fell 12bps to 4.92%. Nevertheless, it closed back under the key 5% mark at 4.960%. The 10-year richened as much as 11bps to 4.58% but finished at 4.63%.
• The positive reaction in US tsys followed a less hawkish than feared message from Fed Chair Powell and the FOMC. A “Higher for Longer” message was delivered but the market focused on Powell’s comment in the press conference that "I think it's unlikely that the next policy rate move will be a hike".
• Ahead, of the FOMC meeting, the ISM manufacturing index (49.2 in April) moved back into contractionary territory after the previous month’s upside surprise.
• Also, JOLTs data showed further signs of easing labour market pressures. The number of job openings dropped to a three-year low and the quits rate fell to 2.1%, the lowest since August 2020. However, US private payrolls increased more than expected in April while data for the prior month was revised higher. US Payrolls are scheduled for release on Friday.