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AUD

CPI In The Spotlight

JGB TECHS

(Z1) Downside Pressure Resumes

AUSSIE BONDS

Overnight Twist Flattening Extends

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Fed left rate steady while main takeaway from Powell's press conference is that the taper is very likely going to be announced in November barring a poor September jobs report. "That could come as soon as the next meeting," he said, adding that the taper could end sometime in the middle of 2022. MNI had reported before the meeting the Fed would likely signal such a timeline at this meeting.
  • Tsy futures trade mixed after the bell-- rotating around near steady 10s. Curves broadly flatter as 30Y Bond trades near late session highs, short end under heavy pressure.
  • The 5s30s yield curve fell below 100.0bps to 96.726 low -- level last seen around July 2020. One desk noted 2-3s "are actually up more in yield" due to the "slight movement in the dots -- as front end will be affected by eventual hikes" while the long end outperforms on "move toward 'fighting' inflation."
  • Overnight reverse repurchase agreement operations: "at an offering rate of 0.05 percent and with a per-counterparty limit of $160 billion per day, twice prior limit to "help ensure continued support for effective policy implementation."
    Focus turns to Thu's weekly claims (+320k est vs. 332k prior), Markit PMIs, Fed exits blackout Thu evening.
    Currently, 2-Yr yield is up 2.2bps at 0.2363%, 5-Yr is up 2.6bps at 0.8553%, 10-Yr is down 1.2bps at 1.3108%, and 30-Yr is down 2.4bps at 1.8317%.
  • Focus turns to Thu's weekly claims (+320k est vs. 332k prior), Markit PMIs, Fed exits blackout Thu evening.
  • Currently, 2-Yr yield is up 2.2bps at 0.2363%, 5-Yr is up 2.6bps at 0.8553%, 10-Yr is down 1.2bps at 1.3108%, and 30-Yr is down 2.4bps at 1.8317%.