Post-FOMC, Pre-NFP

TYZ1 was hemmed in a 0-05 range overnight, last -0-04+ at 130-20, while cash Tsys are little changed across the curve (-0.5 to +1.0bp vs. settlement), with some light cheapening observed in the long end. There has been a couple of spurts of activity, but markets have failed to latch onto anything in an Asia-Pac session that has been bereft of headline flow and further hampered by lower liquidity on the back of the observance a national holiday in Singapore and the proximity to Friday's NFP.

• This came after the post-Fed bear steepening into Wednesday's NY close. To recap, the FOMC confirmed its initial $15bn/month tapering plan ($10bn Tsys & $5bn MBS), which will get underway this month. The central bank stressed that "similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook." Chair Powell was quick to reiterate that the Fed's tapering move does not put an imminent rate hike on the table, which facilitated the aforementioned steepening. On inflation, the Fed noted that "inflation is elevated, largely reflecting factors that are expected to be transitory," a tweak from the previously employed "inflation is elevated, largely reflecting transitory factors.
• Wednesday also saw the Tsy deploy the widely expected cuts to coupon supply in its quarterly refunding announcement, while the latest round of ADP employment data topped exp. (although there was a modest negative revision to the Sep print), which helped the space away from early session highs.
• The BoE provides the major risk event during the London session. While it will be weekly jobless claims, challenger job cuts and unit labour cost data that headlines the local docket on Thursday. Note that House Majority Leader Hoyer has suggested that the House could vote on the well-documented fiscal spending initiatives as soon as Thursday.