Inflation - USD
Today’s hawkish interpretation of the FOMC decision and Powell comments knocked BEs out of initial flight as the risk tone soured.
BEs largely tracked the broader risk tone once again intraday, but ended mostly in the black despite a still shaky risk backdrop.
TIPS were squeezed into today’s $16bn 10y TIPS auction, causing the auction to tail and BEs to come full circle intraday.
USTs are stronger alongside risk assets ahead of the Philly Fed data and the 10y TIPS auction. Banks look at the impact of a rising terminal rate.
Tomorrow’s $16bn 10y TIPS auction weighed on BEs today against a broader risk-off backdrop.
Pipeline pressures cooled last month, and didn’t help BEs which are still reeling from yesterday’s consensus CPI and a broader risk-off move today.
BEs were not enthused by today’s solid but nonetheless consensus CPI with sellers surfacing intraday on concerns of the Fed falling behind the curve.
BEs finally turned the corner after last week’s post-FOMC minutes rout with a solid bid into tomorrow’s heavily anticipated Dec CPI.
BEs continued to sink lower as fear and loathing of a more aggressive Fed continued to weigh heavily on the market.
BEs continued to consolidate lower amid a broader risk-off move, more RY selling and hawkish FOMC minutes today.