Curve Bear Flattens, Debt Ceiling Impasse Continues

TYM3 deals at 113-07+, -0-06, in line with late NY levels. Fedspeak from Bostic crossed a short time ago he noted Fed doesn't want to be locked into a particular rate moves and will let data guide them.

• Cash tsys finished 4-11bps cheaper across the major benchmarks, the curve bear flattened.
• Tsys were pressured into the close as the US debt impasse continued with little progress made on Wednesday, and risk off flows weighed as the S&P500 fell 0.7%.
• The minutes of the May Fed meeting showed that Fed officials were split on the support of more rate hikes, stressing the need to keep their options open.
• Tsys had firmed off session lows after the latest 5 Year Auction stopped through, an above average bid/cover ratio was observed alongside strong indirect take up.
• Earlier in the session concerns over the US debt ceiling impasse and hawkish Fedspeak from Gov. Waller weighed on Tsys early in the NY session. Rep McHenry (R-NC) delivered a downbeat assessment of the talks, and Gov Waller noted he leans towards a June hike as he thinks there hasn't been much progress on taming inflation.
• FOMC dated OIS price a terminal rate of 5.28% in July, there are ~45bps of cuts
• There is a thin docket in Asia-Pac today. Further out we have a slew of US data including Q1 GDP, Initial Jobless Claims and Pending Home Sales. Fedspeak from Richmond Fed President Barkin and Boston Fed President Collins will cross. We also have the latest 7 Year Supply.