Fed Repricing Applies Pressure

It looks like pressure in the U.S. Tsy & Eurodollar space has leaked through into Aussie bonds in recent dealing, with a lack of notable headline flow evident.

• Most of the recent focus has fallen on Goldman Sachs’ altered Fed call (they now look for 7x 25bp rate hikes in ’22 vs. 5x 25bp hikes previously). The OIS strip is has moved to price in such a move, likely weighing on the core FI space in recent dealing.
• There was also some confusion amongst participants re: the protocol surrounding the regular, scheduled Fed discount rate meeting that is due to be held next week. The fact that the meeting is to be “expedited” was garnering some interest, but after some observation that appears to be the regular protocol.
• TYH2 futures worked towards their Thursday lows, but didn’t quite force a challenge of that level (session low of 125-19 vs. yesterday’s low of 125-17+). In Australia, YM broke early lows, but both Tsy futures and Aussie bond futures have moved away from the base of their most recent move lower.