Marginally Firmer In Asia

T-Notes last +0-04 at 132-06, 0-02 off best levels, while cash Tsys trade unchanged to 1.0bp richer across the curve. Regional participants stepped in after cheapening witnessed in the wake of the release of the FOMC's April meeting meetings (which were a little hawkish vs. most expectations), with some modest buying interest seen in Asia. There was little in the way of overt tier 1 headline news overnight, with conflicting rumours surrounding the future of the Israeli-Palestinian conflict and the usual round of Sino-U.S. tension. Pockets of buying in FV & TY futures helped the broader bid.

• As a reminder, cash Tsys cheapened across the curve on Wednesday, with the belly leading the way lower as 5- to 7-Year paper cheapened by ~4.0bp come the bell. The latest 20-Year Tsy auction tailed by ~1.0bp, with the cover ratio dipping below the recent averages, while dealer takedown nudged higher, but still remained below the 6-auction average. The minutes of the FOMC's April meeting was also at the fore. On the prospect of tapering the minutes noted that "a number of participants suggested that if the economy continued to make rapid progress toward the Committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases." On inflation, the minutes noted that "participants also noted that the expected surge in demand as the economy reopens further, along with some transitory supply chain bottlenecks, would contribute to PCE price inflation temporarily running somewhat above 2 percent. After the transitory effects of these factors fade, participants generally expected measured inflation to ease. Looking further ahead, participants expected inflation to be at levels consistent with achieving the Committee's objectives over time. A number of participants remarked that supply chain bottlenecks and input shortages may not be resolved quickly and, if so, these factors could put upward pressure on prices beyond this year." Yields tagged the highest levels of the day in the wake of the minutes after bottoming out in the late NY morning, with the 20-Year Tsy auction accelerating the cheapening into the release of the minutes.
• Weekly jobless claims data and the latest Philly Fed business survey headline the local economic docket in Thursday. Elsewhere, Fedspeak from Kaplan, 10-Year TIPS supply and the Tsy's end of month auction announcement will hit.