Curve Flattens After FOMC

TYU3 deals at 112-30+, +0-02+, in line with late NY levels.

• Tsys were pressured in the aftermath of the Fed holding rates steady as expected with hawkish forward guidance. Twelve out of eighteen Fed officials are expected another 50bps of hikes this year. Fed Chair Powell noted in his press conference that July is live.
• The unexpected hawkish guidance weighed on the short end, 2s10s inversion slipped to its widest level since March 10 when the spread was the lowest since the early 1980's.
• Earlier in the session Tsys had extended gains as PPI printed weaker than expected.
• FOMC dated OIS price 16bps of cuts into the July meeting with a terminal rate of 5.25% in September.
• Australia's May Labor Market report headlines in Asia-Pac, we also have the Chinese monthly activity data scheduled to cross. Further out a slew of data including Retail Sales, Terms of Trade, Initial Jobless Claims and Empire Manufacturing.