Tsys Bear Steepen, But Outperform Europe

Treasuries have bear steepened overnight Friday, but only modestly compared to European counterparts which have been beaten down by continued hawkish ECB rhetoric this morning.

• Cash 10Y Tsys are about 10bp richer to Gilts this morning, and 7bp to Bunds.
• The 2-Yr yield is up 1.8bps at 4.2539%, 5-Yr is up 3.2bps at 3.6502%, 10-Yr is up 4.5bps at 3.4913%, and 30-Yr is up 4.2bps at 3.537%.
• In rates, Peak Fed funds are seen coming in May, at 4.89%, fairly steady vs Thursday's close, with a full 25bp cut priced by the Nov meeting.
• That's up from lows of around 4.80% pre-FOMC, but below the close to 5% peak seen just prior to the Nov CPI release.
• The Feb FOMC sees 32bp of hikes priced, roughly 72%/28% in favor of a 25bp vs 50bp move.
• We get the first post-December meeting FOMC communications this morning with a BBG TV appearance by NY Fed's Williams (0830ET), followed by a moderated discussion with SF Fed's Daly at 1200ET, and back on BBG TV at 1530ET, Cleveland's Mester.
• The only data is prelim PMIs at 0945ET.