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Focus on the Fed

BONDS
  • Equities have rebounded following a statement from Evergrande that suggested onshore bond coupon payments would be made, but with little detail as to exactly whether this would be on time or not.
  • Core fixed income has not seen the same kind of relief and is only marginally lower on the day.
  • Looking ahead the focus will of course be on the Fed decision and presser due later today. November is seen by analysts are the most likely date for a taper to be announced and this meeting is likely to tee up that move. The median Fed funds rate 'dot plot' path to remain fairly static at this meeting vs the June projections, setting up hawkish risks. See the full MNI Fed Preview here.
  • TY1 futures are down -0-1+ today at 133-04+ with 10y UST yields up 0.5bp at 1.329% and 2y yields up 0.1bp at 0.217%.
  • Bund futures are down -0.17 today at 171.57 with 10y Bund yields up 0.2bp at -0.316% and Schatz yields up 0.5bp at -0.719%.
  • Gilt futures are down -0.13 today at 127.36 with 10y yields up 0.2bp at 0.808% and 2y yields down -0.1bp at 0.275%.

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