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Firm Off Session Lows After ISM Services Print

US TSYS

TYU3 deals at 113-31, +0-02+, in line with late NY levels.

  • Cash tsys finished 1-3bps richer across the major benchmarks yesterday, light bull steepening was observed.
  • Tsys firmed off session lows as May ISM Services were weaker than expected, printing its lowest level since December 2022.
  • The Prices Paid component dropped to its lowest level since May 2020, and the Employment component fell below 50 for the first time since December.
  • FOMC dated OIS price ~6bp hike into next week's meeting with a terminal rate of ~5.25% in July. There are ~25bps of cuts priced for 2023.
  • Tuesday's Asia-Pac session is headlined by the RBA's latest monetary policy decision, the bank is forecasted to hold the cash rate steady at 3.85%. Further out the data calendar is thin, Fedspeak from Cleveland Fed President Mester will cross.

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