Pressured In NY As Fed Rate Hike Expectations Tick Higher

TYM3 deals at 115-16, -0-00+, in line with late NY levels.

• Cash tsys finished 2-3bps cheaper across the major benchmarks on Monday. 2 Year Yields sits a touch above 4%.
• A muted European session, the majority of Europe was closed for the observance of national holidays, saw tsys respect narrow ranges with little follow through on moves.
• Pressure came in the NY session as participants reacted to Friday's NFP print, perhaps focusing on the headline number and the fall in unemployment.
• Expectations for a Fed rate hike ticked higher through the session. FOMC dated OIS now price ~19bp hike for the May meeting with a terminal rate of 5%. There are ~65bps of cuts priced for 2023.
• Fedspeak from NY Fed President Williams noted that he expected the unemployment rate to rise gradually to 4-4.5%.
• Official CPI/PPI data from China headlines in the Asia-Pac session. Further out we have Eurozone Retails Sales and NFIB Small Business Survey headlines an otherwise thin docket, we also have the latest 3-Year supply. Fedspeak from Chicago Fed President Goolsbee will cross.