Light Bid Fades In Wake Of FOMC Minutes

TYH3 deals at 111-06, -0-00+, in line with levels seen late in the NY session. There has been little reaction to comments from NY Fed President Williams as he stressed that the Fed is committed to returning inflation to target over the next few years.

• Cash Tsys were flat to 6bp richer across the major benchmarks on Wednesday, the curve bull flattened.
• A reminder that due to the observance of a public holiday in Japan cash Tsys will be closed until the London session today.
• Minutes of the February FOMC meeting pressured Tsys off of best levels. The minutes noted that "a few" members supported hikes greater than 50bps, although there was no indication of expectations of a higher terminal rate than previously expected.
• Rhetoric surrounding financial conditions provided a hawkish tinge.
• FOMC members also noted that a restrictive policy stance would be maintained until incoming data showed that inflation was sustainably falling to the 2% target. Disinflation was not mentioned, in his post meeting press conference Fed Chair Powell had noted that the disinflationary process had begun.
• Earlier in the session St Louis Fed President Bullard reiterated that he sees the terminal rate at 5.375%.
• The latest 5-Year Tsy auction tailed, a soft bid/cover ratio was observed and indirect take up fell.
• There is a thin slate in Asia-Pac today, liquidity will be affected by the aforementioned Japanese holiday. Further out we have Eurozone CPI, US GDP and Initial Jobless Claims. Atlanta Fed President Bostic and SF Fed President Daly will cross. We also have the latest 7-Year Tsy supply.