Curve Bear Flattens On Thursday

TYM3 deals at 112-18, -0-02, in line with late NY levels.

• Cash tsys finished 1-16bps cheaper across the major benchmarks, the curve bear flattened.
• The impasse over the US Debt Ceiling continues to weigh on tsys, negative ratings watch warnings from Fitch and DBRS Morningstar adding to the pressure. House Leader McCarthy noted that he is optimistic a deal can be struck before June 1.
• 10 Year Yields sit at their highest level in two weeks, and the 2s10s inversion printed its lowest level since mid March.
• In the latest round of US data GDP was firmer than expected and Initial Jobless Claims were softer than expectations.
• The latest 7 Year Auction stopped through, strong indirect take up and bid/cover ratio were observed.
• FOMC dated OIS price a terminal rate of ~5.3% in July, there are ~50bps of cuts scheduled for 2023.
• Tokyo CPI headlines the Asian session today, further out we have US Consumer income, Wholesale Inventories, Durable Goods and UofMich Consumer Sentiment.