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Gradually Extending Highs Pre-FOMC

US TSY FUTURES
  • Bonds are gradually leading Tsys to new session highs, curves flattening (3M10Y -7.585 at -117.952, 2Y10Y -.308 at -73.883) ahead the FOMC annc at the top of the hour, Chairman Fed presser at 1430ET.
  • Yields declining: 5YY at 4.4563% (-.0553), 10YY at 4.3127% (-.0459) after climbing to the highest levels since November 2007 (10YY 4.367%, 5Y 4.5205%) yesterday.
  • Overall volume remains muted (TYZ3 <780k) ahead what is expected to be a "hawkish hold" from the FOMC: no change in rate but with a tightening bias ahead.
  • Median of analysts’ expectations for the Fed’s September Dot Plot rates suggest that the central expectation is for no changes from June’s projections: 5.6% for 2023, 4.6% for 2024, 3.4% for 2025, with the new entry for 2026 at 2.6%, and the Longer-Run rate at 2.5%.
  • Cross asset summary: Greenback weaker (DXY -.443 at 109.690), Gold firmer (+14.78 at 1946.14), crude near steady (WTI +.15 at 91.35) and stocks mostly higher: S&P E-Mini Future up 9.5 points (0.21%) at 4499.5, Nasdaq down 12 points (-0.1%) at 13666.72, DJIA up 222.57 points (0.64%) at 34740.99.

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