Firm On Weak US Data & Strong 20-Year Auction

TYH3 deals at 115-28+, -0-0)+, in line with levels seen late in the NY session.

• Cash Tsys finished Wednesday 12-19bp richer, with the belly leading the bid.
• Tsys firmed on weaker than expected retail sales and headline PPI readings.
• The latest 20-Year auction results saw Tsys extended gains, with supply stopping through WI by ~3bp, meanwhile a strong cover ratio and elevated indirect take up was observed.
• The space looked through hawkish Fedspeak from St. Louis Fed President Bullard and Cleveland Fed President Mester.
• Philadelphia Fed President Harker (‘23 voter) reiterated previous comments that rates should be lifted in quarter point increments going forward, also noting data should dictate where rates peak.
• Dallas Fed President Logan (‘23 voter) noted that rates should rise in 25bp steps until inflation data improves and the labour supply-demand mix becomes more balanced. She also said that risks would still be two-sided once the Fed paused.
• The labour market report from Australia provides the highlight in Asia-Pac hours. Further out we have US housing starts, weekly jobless claims and the latest Philly Fed survey. There is Fedpseak from Boston Fed President Collins and Fed VC Brainard, as well as the latest 10-Year TIPS supply.