Twisting Flatter On Tuesday

TYZ2 prints -0-00+ at 117-01+, little changed vs. late NY levels.

• The curve twist flattened on Tuesday with the major benchmarks running within -/+2.5bp on the day at the bell, pivoting around 20s. Data helped the cheapening impulse in the front end, with upside surprises for consumer confidence and JOLTS job openings. Hawkish utterances from both the Fed & ECB continued, with the latter underscoring a need for further hikes. The move was all in real yields, with lower commodity prices pulling breakevens lower.
• Looking ahead, the Asia-Pac docket will be headlined by the latest round of official PMI data out of China, with another contractionary m’fing reading expected (BBG median 49.2 vs, prior 49.0), while the rate of expansion seen in the non-m’fing PMI is expected to slow (BBG median 52.3 vs. prev. 53.8).
• Further out, the refreshed ADP employment data and the latest MNI Chicago PMI print will hit in NY hours, with Fedspeak from Cleveland Fed President Mester (’22 voter), Atlanta Fed President Bostic (’24 voter) and perhaps new Dallas Fed President Logan (’23 voter) all eyed.
• Ultimately, this week’s broader focus is on Friday’s NFP print, with the Fed stressing its central message ahead of its Sep meeting (debate open re: 50-75bp hike, data-contingent, with ~67bp currently priced by OIS). Tuesday’s JOLTS job opening print presents an upside risk to Friday’s headline NFP reading, but the ADP employment print and ISM m’fing employment component may change perceptions between now and then.