Jefferson/Harker-Induced Bid Unwound

TYU3 sits -0-09, 0-01+ off the low of its 0-11+ range. Meanwhile, cash Tsys run 1-3bp cheaper as the curve bear flattens.

• Akin to FOMC-dated OIS, Tsys have unwound Wednesday’s late richening that was spurred by dovish commentary from Fed Governor Jefferson and Philadelphia Fed President Harker. The passage of the debt ceiling legislation through the House and firmer than expected Chinese Caixin manufacturing PMI were the major headline drivers of note in the Asia-Pac session. Although the moves are relatively modest.
• Eurozone CPI and a heavy Eurozone sovereign supply slate need to be digested before NY hours, as do the final manufacturing PMI readings from Europe and a round of ECB speak (headlined by the accounts from the latest ECB meeting and comments from President Lagarde).
• Beyond that the latest ISM manufacturing survey and ADP employment data present the major releases ahead of Friday’s NFP print. Final unit labour cost data for Q1, Challenger job cuts, weekly jobless claims, construction spending and final manufacturing PMI data bulk out the docket on Thursday. We will also hear from Philly Fed President Harker again, although that shouldn’t be a market mover in the wake of his latest round of dovish commentary.