Fed in Focus

Another day, another cycle high for European yields, although Treasuries and gilts have stuck to within yesterday's range.

• Most of the early moves in European fixed income were delayed reactions to ECB Executive Board member Isabel Schnabel's comments (published yesterday) that in her view a hike in July was possible. Bunds had led the way lower, but have since retraced much of the move, with gilts now the biggest movers of the day.
• The market is firmly focused on the Fed meeting later, where a 50bp hike is expected (with markets fully pricing with a small probability of a 75bp hike priced). Markets will be looking for any guide on whether 75bp hikes will be on the table at future meetings and also any guide to the pace of QT. For the full MNI Fed Preview click here.
• TY1 futures are down -0-3+ today at 118-13 with 10y UST yields down -0.5bp at 2.970% and 2y yields up 1.7bp at 2.801%.
• Bund futures are down -0.78 today at 152.89 with 10y Bund yields up 3.7bp at 1.000% and Schatz yields up 3.1bp at 0.299%.
• Gilt futures are down -0.39 today at 117.68 with 10y yields up 3.3bp at 1.990% and 2y yields up 2.7bp at 1.663%.