Curve Steepens, BOJ In Focus

TYH3 deals at 114-20, -0-01+, little changed from levels seen late in the NY session.

• Cash Tsys finished Tuesday 3bps richer to 5bps cheaper, twist steepening, with a pivot around 3s.
• Tsys were briefly pressured in the European session, before weaker than expected Empire Manufacturing data facilitated a bounce off session lows.
• Gains extended as a bid in German Bunds, as Bloomberg reported that the ECB is pondering slower hikes after February, spilled over.
• Tsys pared gains, then respected the daily ranges established through much of the remainder of the NY session, with only minor breaches observed.
• Fedspeak from Barkin late in the NY session reiterated themes observed in recent communique, that inflation is still too high and additional rate hikes are required. He also noted that inflation needs to be convincingly back to target before the Fed pauses.
• In Asia-Pac today focus will fall on the latest BoJ decision, with the market primed for another hawkish tweak to the Bank’s YCC settings, even though nearly all surveyed economists look for the bank to leave its policy settings unchanged (with varying degrees of conviction).
• Further out we CPI data from the UK and EU before a slew of US data including Retail Sales, PPI and Industrial Production as well as the the Fed' s Beige Book. There will be Fedpseak from Atlanta Fed President Bostic, Philadelphia Fed President Harker and St Louis Fed President Bullard. We also have the latest round of 20-Year supply.