Pares Gains After Soft US Data

TYM3 deals at 116-12, -0-06, in line with late NY levels.

• Cash tsys finished 2-5bps richer across the major benchmarks on Wednesday. The wings marginally led the bid. 10 Year Yield fell to the lowest level since early September
• Tsys firmed as ADP Employment increased less than expected, the data precedes Friday's US payrolls report which forecast unemployment rate holding at historically low levels.
• Gains briefly extended as the ISM Services Index fell more than expected, the survey showed momentum in the US economy is slowing.
• Tsys ticked away from session highs as May FOMC pricing unwound its post ISM moves, in the immediate aftermath of the ISM print OIS markets priced in ~8bp hike in May.
• FOMC dated OIS now price 12bp hike in May with the terminal rate seen at 4.93%. There are ~80bps of cuts priced for 2023.
• Caixin Services PMI data from China provides the highlight in Asia. Further out we have initial jobless claims and Fedspeak from St Louis Fed President Bullard will cross.