Data & BoC Inspire Cheapening, Fed Pushes Back On Recession Narrative

TYU2 operates around late NY levels after looking a little higher at the re-open, last +0-04+ at 118-25.

• To recap, cash Tsys finished Wednesday’s session 1-10bp cheaper, with the 3- to 5-Year zone leading the way lower as the curve bear flattened. Generally solid U.S. data, including a beat for the ISM m’fing survey, and a hawkish round of forward guidance accompanying the BoC’s 50bp rate hike applied pressure in NY dealing, after a bit of a bounce in early NY trade. Tsys found a base alongside equities (which were seemingly spooked by the ISM-BoC mix), although the latter still finished comfortably lower on the day (S&P 500 -0.8%). Note that Fed-dated OIS now prices in a post-Dec FOMC Fed Funds rate of ~2.80% (up from 2.73% late on Tuesday and ~2.65% at the close of play last week).
• Meanwhile, a triumvirate of Fed speaks (Barkin, Bullard & Daly) looked to playdown the idea of recession.
• Flow of note included a block sale of UXY futures (-8,577) during the early part of the NY afternoon.
• There isn’t much in the way of tier 1 economic releases on the Asia-Pac economic docket. Looking ahead, ADP employment data headlines the NY docket on Thursday, with weekly jobless claims, challenger job cuts, factory orders and final durable goods readings also on tap. Fedspeak will come from NY Fed’s Logan (soon to be Dallas Fed President) and Cleveland Fed President Mester (’22 voter).
• A quick reminder that the long holiday weekend in the UK will thin out wider market liquidity over the next couple of sessions.