Little Changed As Markets Look For A Fed Skip

Tsys are little changed to 1bp richer with an incremental steepening bias noted as London & European participants filter in. TYU3 is +0-06+ around the middle of its 0-07 range, with the space operating a little off of yesterday’s cheaps.

• Meaningful headline flow was somewhat lacking overnight, with a phone call between U.S. Secretary of State Blinken and his Chinese counterpart having little feedthrough into markets.
• That left the Asia-Pac region to digest Tuesday’s CPI print & Gilt cheapening, in addition to setting up for the impending FOMC decision.
• Asia-Pac Tsy flow of note saw a cumulative +5K of blocks in the FVQ3 109.50 calls.
• Ahead of today’s FOMC decision the dated-OIS strip is showing a mere ~3bp of tightening for the event, with ~18bp of cumulative tightening showing through July. Beyond there, ~15bp of cuts are priced by year-end.
• A near 25K block seller in SFRM3 (at 94.770) caught the eye in the short end overnight.
• Our full preview of the FOMC decision can be found here.
• PPI data and the weekly MBA mortgage apps print bulk out the NY docket.