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Substantial Further Progress Needed

US TSYS SUMMARY
Rates finish near late session highs after choppy, post-FOMC trade as markets took some time to digest steady rate and $120B monthly bond buy-backs. Inflation rising but still deemed transitory while employment metrics have improved.
  • Rates finally broke range, surged higher after Fed Chairman Powell press conf 30 minutes after policy annc. No time to talk about tapering on the back of transitory inflation providing tail wind for rates here. Equities also making new all-time highs ESM1 4193.75 before paring gains late. US$ initially rallied but reversed move on Powell presser that "substantial further progress" will "take some time."
  • On unemployment, Powell suspects "insurance benefits will run out in September. To the extent that's a factor, which is not clear, it will no longer be a factor fairly soon. My guess is it will come back to this economy where we have equilibrium between labor supply and demand. It may take some months, though."
  • Focus turns to US Pres Biden address to Joint Session of Congress: tonight at 0900ET (broadcast on all major networks and streamed live on internet) to propose his $1.8T Family plan that includes education, child care and paid leave spending.
  • The 2-Yr yield is down 1.6bps at 0.1641%, 5-Yr is down 2.7bps at 0.854%, 10-Yr is down 1.4bps at 1.6076%, and 30-Yr is down 0.8bps at 2.2858%.
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