Market Roundup: Extending Lows, More Hawkish BoE Headlines

Tsys remain weaker - extending lows ahead midday, yield curves back to bear steepening (but still off last Thu's inverted highs): 2s10s +5.798 at -46.925 after 2YY made new 15Y high of 4.3450% overnight, currently 4.2693% +.0682.

• Market focus on BoE after last Thu's 50bp rate hike and Gilt sales: Carry-over selling in US FI this morning partially tied to London mkt pricing in chance of BOE emergency rate hike (before next BoE in Nov) in aftermath of UK gov's "Growth Plan" (ie fiscal event) and further comments from the Chancellor over the weekend that more tax cuts are to come.
  
• Bonds looking to test session lows after latest BOE headlines: "BOE BAILEY WON'T HESITATE TO CHANGE RATES BY AS MUCH AS NEEDED", though OE TO ASSESS POUND DROP, FISCAL PLAN AT NEXT SCHEDULED MEETING", bbg
• Meanwhile, focus turns to US Tsy $43B 2Y note auction (91282CFN6) at 1300ET, and Fed speak with London closed for the day:
  • 1200ET: Atlanta Fed Bostic virtual event on income, wealth inequality
  • 1230ET: Dallas Fed Logan moderated Q&A bank conf, no text
  • 1600ET: Cleveland Fed Mester eco-outlook, text and Q&A
• Otherwise limited react to second tier data: CHICAGO FED AUG. NATIONAL ACTIVITY INDEX: 0.00, Consensus 0.23 from 0.29 in Jul; US SEPT. DALLAS FED MANUFACTURING INDEX AT -17.2 VS -12.9, consensus -10.