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Substantial Further Progress Not Yet Reached

US TSYS SUMMARY
Tsy futures are back to steady/mildly mixed in the hour after the closing bell, markets still digesting the latest FOMC policy announcement.
  • Rates extended session lows after the Fed kept rates and QE steady. Dip buyers quickly filled the gap with futures trading just as quickly back to pre-release levels. The statement a little hawkish as "economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings." Similarly, indicators of economic activity and employment have "continued to strengthen", rather than prior statement's simply "strengthened".
  • "This is a very strong labor market," Powell stated. "If you look at the number of job openings compared to the number of unemployed, we're clearly on a path to a very strong labor market with high participation, low unemployment, high employment, wages moving up across the spectrum."
  • Nevertheless, Tsys continued to see-saw higher with one desks saying there was "nothing for hawks to flap over" in the latest annc. "We have not reached substantial further progress yet," Chairman Powell stated in his Q&A session, "we see ourselves as having some ground to cover to get there".
  • Tsy and Eurodollar option flow proved mixed on net, some large upside call positions unwound in both after the policy annc. The 2-Yr yield is up 0.2bps at 0.2055%, 5-Yr is up 1.9bps at 0.7175%, 10-Yr is up 0.2bps at 1.2427%, and 30-Yr is up 0.9bps at 1.9027%.
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