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(Z1) Off Lows, But Remains Weak


Flat Restart After Wednesday's Steepening

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T-Notes operate a touch above their late Thursday lows, -0-04 at 132-08.

  • The Tsy curve was subjected to some aggressive bear steepening on Thursday, with participants focusing on the hawkish developments witnessed come the end of Wednesday's FOMC meeting, unwinding the bulk of the twist flattening that came into play late Wednesday. This left 2s 2.5bp cheaper come the bell, while 30s ran ~13bp cheaper on the day, with all of the major yield benchmarks now above their pre-FOMC levels.
  • A hawkish take when it came to the latest BoE monetary policy decision provided further tailwinds for yields.
  • Equities firmed, adding to the pressure, although a WSJ article suggesting that "China is telling authorities to prepare for Evergrande's potential collapse, officials say, signalling a reluctance to bail out the debt-saddled developer," provided a brief speed bump that markets quickly overcame.
  • The space also looked through unexpected upticks in both the initial and continuing jobless claims prints.
  • Broad based selling from a variety of account types was witnessed in the long end, driving the steepening, while flows in the belly were a little more mixed, per several desks.
  • There isn't much in the way of tier 1 risk events slated for Asia-Pac hours, while Fedspeak from Powell, Clarida, Bowman, Mester, George & Bostic is due during NY hours.