Recovering From Lows

TYH4 is -0-02 at 111-21, 0-02 off the high of a contained 0-07+ range, with volumes picking up after a Japanese holiday limited activity and kept cash Tsys closed in Asia-Pac hours).

• Cash Tsys have recovered to essentially neutral levels during early London trade, after some early London cheapening (TY session lows were seen in Asia hours).
• Early Monday inputs included already swelling USD & EUR IG issuance slates (headlined by a USD multi-part benchmark offering from Saudi Arabia, including 6-, 10- & 30-Year paper), softer-than-expected German factory orders data and a firmer-than-expected round of Swiss CPI data.
• The weekend saw Dallas Fed President Logan stress that the central bank should not rule out a move higher in interest rates, stressing her focus on financial conditions at the same time.
• On the future of QT, she thinks “it’s appropriate to consider the parameters that will guide a decision to slow the runoff of our assets. In my view, we should slow the pace of runoff as ON RRP balances approach a low level. Normalizing the balance sheet more slowly can actually help get to a more efficient balance sheet in the long run by smoothing redistribution and reducing the likelihood that we’d have to stop prematurely.”
• On the fiscal side, the weekend saw congressional leaders announce an accord re: top-line spending levels for the current FY. This essentially reduces the chance of a government shutdown occurring later this month.
• FOMC-dated OIS shows ~135bp of cuts through ’24 at typing, after Friday’s data-inspired vol. saw some meaningful swings in that marker.
• NY Fed inflation expectations data and comments from Atlanta Fed President Bostic (’24 voter) will cross today.