Heavy European supply on Fed day

As is often the case on FOMC decision day, it has been a fairly quiet start to the European morning session with core bonds generally a bit lower, led by gilts. Peripheral spreads are lacking direction.

• Issuance has again been a talking point in European markets with the UK and Germany holding auctions while Austria, Greece and Slovenia all launch new issues via syndication.
• Some attention has been paid to comments from ECB's Knot, although more in FX space as he is reported as saying that the ECB has the tools to counter euro appreciation.
• As we note in the MNI Fed Preview (see here), The FOMC is likely to use the January meeting to reflect on developments over the previous six weeks and assess how they may impact the medium-term economic and monetary policy outlook. But there is little reason to expect the Fed to signal a change of course at this meeting, particularly when it comes to slowing the pace of its asset purchases - as Chair Powell put it earlier this month, "now is not the time to be talking about exit".
• TY1 futures are down -0-1 today at 137-11 with 10y UST yields up 0.6bp at 1.042% and 2y yields unch at 0.122%.
• Bund futures are up 0.05 today at 177.57 with 10y Bund yields down -0.1bp at -0.536% and Schatz yields down -0.4bp at -0.732%.
• Gilt futures are down -0.11 today at 134.53 with 10y yields up 1.5bp at 0.279% and 2y yields up 1.1bp at -0.134%.