FOMC Annc Taper, Tsy Cuts Coupon Sizes

Rates finished weaker after latest FOMC left rate steady while annc taper starting later in November as well as December. Nevertheless, the Fed is "prepared to adjust taper if necessary."

• Transitory inflation language tweaked, with some more explanatory text on why inflation is seen "transitory", but the word itself NOT removed (which would have been more hawkish).
• Extending session lows now after decent two-way post FOMC, Tsy futures saw sharp pick-up in selling with yields climbed (10YY 1.5981%H; 30YY 2.0175%H). Transitory "tweak" saw stocks climb to new all-time highs: ESZ1 4657.0.
• In line with yield curves bouncing steeper: sources reported mix of domestic real$ buying 2s, 3s and 5s, foreign real$ bought 5s, real$ bought 3s5s steepeners.
• First highlights: Rates weaker after better than expected Oct ADP showed private employment gain of 571k vs. +400k est. Quarterly Tsy refunding pared coupon auction sizes $2-$3B.
• Tsy is offering $120 billion of Treasury securities to refund approximately $75.9 billion of privately-held Treasury notes and bonds maturing on November 15, 2021. This issuance will raise new cash of appr $44.1 billion.
• The 2-Yr yield is up 2.6bps at 0.4758%, 5-Yr is up 3.9bps at 1.1865%, 10-Yr is up 4.2bps at 1.591%, and 30-Yr is up 3.6bps at 1.9951%.