Curve Steepens On Wednesday

TYM3 deals at 115-27+, +0-05, a touch above late NY levels.

• Cash tsys finished 7bps richer to 1bp cheaper across the major benchmarks, the curve twist steepened pivoting on 30s.
• Tsys firmed in the immediate aftermath of the US CPI print, the headline print was a touch lower than expected as inflation continues to fall in the US. Food prices had their first monthly decline since Nov 2020.
• Cross market flows saw tsys scales back from session highs, EGBs were pressured on ECB speak from Holzmann who cited a need to keep hiking noticeably beyond May due to persistent inflation.
• Further pressure came as the latest 10 Year supply tailed despite an average bid/cover ratio.
• Tsys firmed off session lows and marginally extended gains after the latest FOMC meeting minutes, Fed officials debated a temporary pause to rate hikes but unanimously decided inflation pressures were sufficient to warrant a 25bp hike. The minutes also noted that many officials lowered peak Fed Funds rate due to banking stress and Fed staff now forecast a mild recession as their base case.
• In Asia-Pac data the latest labour market report from Australia is the highlight. Further out we have PPI and Initial Jobless Claims. We also have the latest 30-Year supply.