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Double Shot of Hawkish Policy

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FI futures mostly weaker (30Y Ultra still in the green) after the bell, real vol gradually evaporated in the second half as rates scaled off midday highs. Yield curves flatter (but off lows on wide range: 2s10s at -36.154 vs. -39.584 low/-29.102 high) as short end remains under pressure following this morning's hawkish tone from Fed and ECB.

  • Volatile pre-Jackson Hole trade after fog of early Fed speak (generally less-hawkish comments from Bostic, Harker and Bullard) saw 30YY slip to initial 3.2298% low (3.2113% low in the last few minutes).
  • Fast reversal (30YY bounced back to 3.2704%) well ahead Chairman Powell opening remarks at JH summit. ECB stole the Fed's thunder one desk quipped, others a little indignant at ECB interest over discussing 75bp rate hike next month. Caveat from Reuters story: "I won't necessarily back 75 but there is no reason it shouldn't be discussed," one of the sources, who asked not to be named, said.
  • Rates gapped lower again after Chairman Powell's opening remarks deemed hawkish: the Fed needs to get restrictive and STAY restrictive for an extended period of time. Bonds gapped to new session highs briefly following better than expected U-Mich sentiment (58.2 vs 55.5 est).
  • Futures continued to gyrate higher into late morning trade - heavy volume more related to Sep/Dec rolling (near 90% complete ahead next Wed's First Notice), not to mention Sep quarterly Tsy option expiration that gave traders fits as underlying futures repeatedly see-sawed through several strikes across the board.
  • Jackson Hole eco summit continues Saturday, Link to the: agenda.
  • The 2-Yr yield is up 3.5bps at 3.4007%, 5-Yr is up 5.5bps at 3.2068%, 10-Yr is up 1.7bps at 3.0427%, and 30-Yr is down 3.5bps at 3.2062%.
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FI futures mostly weaker (30Y Ultra still in the green) after the bell, real vol gradually evaporated in the second half as rates scaled off midday highs. Yield curves flatter (but off lows on wide range: 2s10s at -36.154 vs. -39.584 low/-29.102 high) as short end remains under pressure following this morning's hawkish tone from Fed and ECB.

  • Volatile pre-Jackson Hole trade after fog of early Fed speak (generally less-hawkish comments from Bostic, Harker and Bullard) saw 30YY slip to initial 3.2298% low (3.2113% low in the last few minutes).
  • Fast reversal (30YY bounced back to 3.2704%) well ahead Chairman Powell opening remarks at JH summit. ECB stole the Fed's thunder one desk quipped, others a little indignant at ECB interest over discussing 75bp rate hike next month. Caveat from Reuters story: "I won't necessarily back 75 but there is no reason it shouldn't be discussed," one of the sources, who asked not to be named, said.
  • Rates gapped lower again after Chairman Powell's opening remarks deemed hawkish: the Fed needs to get restrictive and STAY restrictive for an extended period of time. Bonds gapped to new session highs briefly following better than expected U-Mich sentiment (58.2 vs 55.5 est).
  • Futures continued to gyrate higher into late morning trade - heavy volume more related to Sep/Dec rolling (near 90% complete ahead next Wed's First Notice), not to mention Sep quarterly Tsy option expiration that gave traders fits as underlying futures repeatedly see-sawed through several strikes across the board.
  • Jackson Hole eco summit continues Saturday, Link to the: agenda.
  • The 2-Yr yield is up 3.5bps at 3.4007%, 5-Yr is up 5.5bps at 3.2068%, 10-Yr is up 1.7bps at 3.0427%, and 30-Yr is down 3.5bps at 3.2062%.