Volatile Session On Powell Remarks; 3Y Auction, Corporate Issuance Weigh

TYH3 deals at 113-08+, +0-01, in line with late NY levels.

• Cash Tsys finished 2bp richer to 4bp cheaper across the curve.
• Late NY trade saw Tsys initially firm as Fed Chair Powell reiterated previous comments in that the disinflation process has begun. However gains were pared as he noted the process will take time, and that further rate increases may be on the table if the job market remains strong.
• Price action in Bunds as the ECB announced they are to lower rates on government deposits to incentivise withdrawals also spilled.
• Further pressure on Tsys was observed as the 3-Year auction tailed by ~4bp, with a weaker than average bid/cover ratio observed.
• Corporate issuance activity saw Tsys extended losses to session lows, with $37bn in issuance spurring rate lock activity across the curve.
• Earlier, Minneapolis Fed President Kashkari noted he still sees the terminal rate at 5.40% and that rates need to keep rising due to the strength of the jobs market.
• There is a thin data calendar in Asia-Pac today. Further out we have a number of Fed speakers including NY Fed President Williams, Gov Cook, VC Barr, Atlanta Fed President Bostic, Minneapolis Fed President Kashkari ('23 voter) and Gov Waller. We also have the latest 10-Year Supply.