Curve Steepens A Touch On Monday

TYH2 hovers around Monday’s late NY highs, last +0-02 at 128-01.

• To recap, Tsys unwound the bulk of their early cheapening as we moved through Monday trade. Atlanta Fed President Bostic (’24 voter) reaffirmed the undertones from his weekend interview i.e. he was not looking for a 50bp hike in March as his base case (as we flagged previously). Some of the early cheapening had come on the back of Bostic’s openness to a 50bp hike/more aggressive tightening path in a weekend FT interview (although he did stick to his 3x 25bp hike central scenario in that interview). Elsewhere, Kansas City Fed President George (’22 voter, hawk) focused on the balance sheet rundown in her address. She favours more aggression on that front, which could result in a shallower hiking cycle. Cash Tsys were flat to ~3.5bp cheaper across the curve come the bell, with the belly of the curve outperforming and the long end lagging on the day. This allowed the 2-/10-Year and 5/30-Year yield spreads to steepen a little (the former hit the flattest level since late ’20 in early Monday dealing).
• The latest RBA monetary policy decision headlines during Asia-Pac hours. Looking ahead to the NY session, the ISM m’fing survey & JOLTS jobs data headline.