Fixed income markets initially fell at the open, as energy prices rose and a re-escalation of US-Iran tensions, but have come off worst levels. Over the weekend, US forces struck 140 Iranian military targets on Saturday and took further action on Sunday, while Iran attacked US bases in the Gulf and announced that the Strait of Hormuz is closed.
USTs -2 ticks just below the figure at 108-31 having been in a 108-26+ to 109-01 range, with yields falling a touch from 4.60% while SFRZ6 is at 95.925 off 1bp having been in a 95.89 to 95.935 range and implying an 80% chance of 2 hikes by the year or to put it another way, in terms of market pricing, the October meeting is the first fully-priced hike by the Fed, with a further hike fully priced by Apr’27.
On the Fed speaker front, Fed’s Waller is slated to speak later today, while a flurry of speakers are expected throughout the week.
On the docket today(CT);
11:30 pm Federal Reserve governor Christopher Waller speaks
1:00 pm Monthly U.S. federal budget June
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