Softer On The Day, Shrugging Off BoJ Speculation

Any BoJ sources-derived (light) support for Tsys has already been more than reversed, with TYH4 hitting a fresh session low of 110-03+ in recent trade. Friday’s low (110-00+) presents the initial point of downside technical interest.

• Cash Tsy yields are 2-3bp higher on the day, with a light steepening theme seen on the curve.
• A reminder that the weekend saw WSJ Fed watcher Timiraos run a piece titled “Jerome Powell’s Inflation Fight Is Succeeding, Raising Questions About Rate Cuts”. That would have been a marginal hawkish input.
• Fed Funds futures continue to more than fully discount a 25bp cut through the end of the May ’24 FOMC, with a cumulative ~108bp of cuts showing through ’24 on the whole (comfortably shy of the recent dovish extreme of ~135bp).
• Asia-Pac flow was dominated by a ~$150K DV01 FV/WN block flattener, which helped the broader curve to session flats overnight.
• NY Fed inflation expectations present the highlight of the US docket today.