Hawkish Fedspeak In Focus

TYZ2 deals at 113-00, +0-02+ in early Asia trade, a touch below levels seen in late NY dealing.

• Tsys were little changed at the close yesterday, as hawkish ECB comments then hawkish Fedspeak unwound the richening move seen in early Monday trade. Cash Tsys dealt 1.5bp richer to 1.5bp cheaper come the close, with the belly weakening and wings richening.
• St. Louis Fed President Bullard said markets may be underestimating the chances of higher rates, whilst his NY counterpart Williams noted policymakers have more work to do to curb inflation. Elsewhere, a delayed release of comments from Fed Vice Chair Brainard saw her note that supply shocks are keeping inflation risks elevated. Cleveland Fed President Mester also stuck to her hawkish playbook.
• Dallas Fed Manf Activity came in stronger than expectations, -14.4 vs exp -21.0, helping Tsys cheapen at the margin.
• There is a thin docket in Asia-Pac hours today, although the German NRW state CPI will provide interest pre-London. NY hours will see the release of some of the house price metrics and Conference Board consumer confidence data