Fed Edging Closer To Tapering

USTs have traded weaker alongside a broader sell-off in European sovereign bonds earlier in the day.

• UST cash yields are 1-3bp higher on the day with the blly of the curve underperforming.
• TYZ trades at 131-25+, towards the lower end of the day's range (L: 131-19+ / 132-05+)
• Comments from several Fed speakers hit the wires earlier. Chicago Fed President Charles Evans argued: "I see the economy as being close to meeting the 'substantial further progress' standard we laid out last December" and further that "If the flow of employment improvements continues, it seems likely that those conditions will be met soon and tapering can commence."
• These comments were echoed by New York Fed President John Williams: "Assuming the economy continues to improve as I anticipate, a moderation in the pace of asset purchases may soon be warranted" and by Governor Lael Brainard: "Employment is still a bit short of the mark on what I consider to be substantial further progress. But if progress continues as I hope, it may soon meet the mark".
• Preliminary Durable Goods Orders for August came in above expectations (headline: 1.8% M/M vs 0.6% survey), while the Dallas Fed Manf. Activity Index update for September missed (4. vs 11.0 expected).