Inflation - USD
BEs adopted a newfound attitude after the Fed ruined the day yesterday, lending solid support to today’s $14bn 10y TIPS reopening.
Gains for the long end of the euro inflation curve following a 30y lift took forwards above 2%. Ahead, dealers are mostly positive about the BTPei.
The Fed/Powell’s more decisive taper talk at today’s FOMC decision scared BEs lower amid better RY selling. 10y TIPS auction now eyed.
Risk sentiment stabilized after yesterday’s scare but BEs were sticky today, reluctant to join the modest risk-on move despite the Fed’s help.
Summing up this historic day in his market, one seasoned basis swapper said the transition to RFRs will make regulators happy. If that is possible.
The BEs curve steepened with tenors beyond the very front-end getting a modest bump higher amid many cross-currents.
The August CPI print missed the mark at most points - but not shockingly so – with BEs unsurprisingly bear steepening post data.
BEs sulk a tad on the eve of CPI as fast money sellers took advantage of recent strength.
TIPS breakevens hit an air pocket intraday but managed to returned to their earlier cruising altitudes despite headwinds.
BEs once again largely ignored the broader inflation unfriendly backdrop and pushed higher for the second consecutive session.