Firm Off Session Lows As Powell Flag Data Dependency

TYU3 deals at 111-30+, -0-06, in line with late NY levels.

• Cash tsys finished flat to 4bps richer across the major benchmarks, light bull flattening was apparent.
• After a muted reaction to the Fed raising rates 25bps to a 22-Year high, tsys firmed off session lows as Fed Chair Powell emphasised data dependency for further hikes in the press conference.
• Also in the press conference Powell reiterated signs of progress in labour market balance, and noted the potential impact of tighter credit conditions.
• A block seller in TY (5k lots) helped cap gains late in the session.
• FOMC dated OIS remains stable, a ~5.4% terminal rate is seen in November with ~60 bps of cuts to June 2024.
• Industrial Profits from China headline an otherwise thin docket in Asia. Further out we have US GDP, durable goods orders, initial jobless claims and wholesale inventories. The latest 7-Year Supply is also due.