Curve Bear Flattens Post Fed, Bounces From Lows On Data & Real Money Flows

TYZ2 deals around late NY levels, -0-05+ at 109-27+, with little impact from the latest round of headlines re: Apple altering hiring plans and indications of an impending NY meeting between U.S. & Taiwan officials.

• Note that the 2-/10-Year curve registered the deepest level of inversion witnessed in the current cycle on Thursday, with cash Tsys running 3-9bp cheaper at the close.
• Pre-NY trade was driven by the fallout from Wednesday’s FOMC as global core FI markets cheapened.
• A dovish round of communication surrounding the latest BoE rate hike (following the Fed with the widely expected 75bp step), softer than expected unit labour costs and a small pickup in continuing jobless claims were noted during the early rounds of NY dealing, before a weaker than expected ISM services reading allowed the space to rally from session lows.
• Desks flagged real money interest as a driving force for the rally on the flow side, while a block buy in TY futures aided the bid pre-ISM (+5.5K).
• There isn’t much in the way of meaningful tier 1 risk events slated for the Asia-Pac session. Further out, Friday’s NY docket is headlined by the latest labour market report (see our full preview of that event here), with post-blackout Fedspeak due from Collins & Barkin.