Free Trial

Philly Fed Harker Leans Dovish

US TSYS
  • US rates remain strong after the bell, holding to a narrow range after scaling back early session support. No obvious headline driver, US markets appear to be following German Bund's lead (trading 133.45 high, through 133.11 50D EMA resistance).
  • Bonds outperformed (USU3 +31 at 122-17 cs. 123-05 high) as curves reversed Monday's steepening: 3s10Y -9.678 at -142.744, 2Y10Y -6.185 at -74.160.
  • No significant reaction noted from scant data (US JUN TRADE GAP -$65.5B VS MAY -$68.3B; US JUN WHOLESALE INV -0.5%; SALES -0.7%), with more of the same Wednesday.
  • Philly Fed’s Harker (’23 voter) relayed earlier the Fed doesn’t want to overdo it with Fed tightening and we’ll start cutting rates sometime probably next year helps take the edge off an intraday climb in Fed implied rates.
  • Harker broadly repeated the gist from his prepared remarks earlier today although the mention of cuts comes after similar comments from Williams yesterday, even if it is still consistent with the median dot from the June SEP pencilling in 5.5-5.75% for 4Q23 going to 4.5-4.75% for 4Q24.
  • Strong upsized ($42B) 3Y note sale: trades 19bp through: 4.398% high yield vs. 4.417% WI; 2.9x bid-to-cover vs. 2.88x prior month.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.