Richer On Tuesday, Fed In View

TYH3 deals at 114-20, +0-03+, in line with levels seen late in the NY session

• Cash tsys finished Tuesday 1-5bps richer, with the short end of the curve leading the bid.
• Tsys firmed as the Q4 Employment Cost Index, which is closely watched by the Fed, printed lower than expectations.
• Mild pressure came as there were mixed rounds of data. House Prices fell less than expected, however MNI Chicago PMI was weaker than expected and Consumer Confidence declined.
• Session lows were retested as reports that German inflation data, which had been delayed last week, had been released. MNI's latest confirmation is that the Destatis release has been delayed and a publication date will be confirmed this week.
• Tsys bounced off lows, the earlier reversal spurred month-end buyers as risk was unwound ahead of today's Fed rate decision.
• There is a thin docket in Asia-Pac today. Further out we have Eurozone PMI and CPI, before the ISM Survey and JOLTs job opening. However headline today is the FOMC rate decision, with a 25bp hike all but priced in OIS markets participants will look to the guidance in Powells press conference (our preview is here).