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Unsurprisingly Limited Bid After Softer Beige Book

US TSYS
  • Treasuries have rallied circa 1bp across the curve since the Beige Book marked further moderation across activity, pricing and labor markets.
  • Most benchmark tenors remain within the day’s range having already rallied heavily on the day, although 30s break fresh highs.
  • The curve sits 9.5-6bp richer, bull steepening with 2s10s at -37.5bps (+3.5bps).
  • It would have been hard for the report to further lower near-term Fed pricing after already large further drops today, and indeed the first cut is still seen with May (cumulative 28bp) with roughly 50/50 chance of a cut in March.

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