Market Roundup: Bonds March Steadily Higher

Tsys finish near late session highs, yield curves bull flattening - completely reversing the prior session move: 2s10s -6.376 at -89.840. Bonds lead the rally early, similar drift in EGBs with no new inflation metric surprises overnight.

• Tsys pared gains briefly after higher than expected ISM Services composite of 55.1 (54.5 est), components: Business: 56.3; Prices Paid: 65.6 (-2.2); New Orders: 62.6 (+2.2); Employment 54.0 (+4.0).
• Tsys quickly rebounded with Bonds to early Wednesday levels (pre-ISM prices paid driven sell-off). Short end, however, lagged the move: Fed funds implied hike steady for Mar'23 at 31.2bp, but gained in May'23 cumulative 59.4bp (+2.0) to 5.170%, Jun'23 77.0bp (+2.1) to 5.345%. Fed terminal climbed to 5.480% high in Oct'23, but receded to 5.450% at the close.
  
• Salient events later in the week:
  • Fed Chair Powell semi-annual mon-pol report to Congress, Tue 1000ET
  • Fed Chair Powell report to Congress: House Fncl Srvcs, Wed 1000ET
  • ADP employment data for Feb (106k prior, 200k est), Wed 0815ET
  • NFP employment data for Feb (517k prior, 200k est), Fri 0830ET