Real Yields Remain Elevated Post-FOMC Minutes

Treasuries have been fading the knee-kerk selloff from Wednesday's FOMC Minutes, with 2- and 5-Yr yields falling to the lowest levels since Aug 11 and the curve bull flattening. Fairly light volumes though (~210k TYUs).

• The market's main takeaways from the Minutes appear to be that the Fed doesn't see urgency in taking new action, and remains averse to yield curve control. This has been seen in real yields which remain higher (though off highs) since the minutes were released, helping boost the dollar and weaken equities. Inflation breakevens have come down and stayed down, thus the drop in headline yields.
• Chinese confirmation of a US-China agreement to conduct a call in the near future initially boosted appetite (around 0300ET), but the optimism has since faded.
• The 2-Yr yield is down 0.6bps at 0.1331%, 5-Yr is down 1.9bps at 0.2643%, 10-Yr is down 2.8bps at 0.6525%, and 30-Yr is down 3.9bps at 1.3852%.
• Sep 10-Yr futures (TY) up 4.5/32 at 139-16.5 (L: 139-10 / H: 139-17.5)
• 0830ET sees jobless claims and Aug Philly Fed; SF Fed's Daly speaks at 1300ET.
• Speaking of real yields: Tsy reopens 30-Yr TIPS at 1300ET ($7B); prior, at 1130ET, we get $65B combined of 4-/8-week bill sales. Also at 1100ET we get announcements for upcoming bill sales and 2-/5-/7-Yr notes and 2-Y FRN.
• NY Fed buys ~$3.625B of 7Y-20Y Tsys.