TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLED 12 TICKS HIGHER AT 106-05+

Yield curve bull flattens, reversing post-Fed move as Fed credibility gets a boost following Wednesday's hike. At settlement, 2-year -5.7bps at 4.679%, 3-year -7.1bps at 4.752%, 5-year -8.5bps at 4.792%, 7-year -8.7bps at 4.861%, 10-year -8.1bps at 4.939%, 20-year -7.3bps at 5.326%, 30-year -7.1bps at 5.290%. THE DAY: Treasury yields were lower across the curve on Thursday, with Treasuries and the broader market reversing much of the post-Fed move. Many have cited improved Fed credibility following Wednesday's hike, with the decision reinforcing the Fed's commitment to returning inflation to target despite pressure from US President Trump for lower rates. Also supporting Treasuries was the move lower in the crude complex. There was little new on the US/Iran front, but several constructive reports emerged regarding the wider region: 1) China reportedly pressed Iran to help rein in the Houthis following a Saudi appeal; 2) Saudi Arabia reportedly asked Oman to seek a two-week truce with the Houthis; and 3) Pakistan's Army Chief urged Iran to convince the Houthis not to attack Saudi Arabian energy facilities. The reports helped oil settle in the red, although geopolitical risks remain, with Trump telling Axios he is at a critical juncture regarding what to do next with Iran. Elsewhere, US data was mixed. Jobless Claims were strong, maintaining the recent trend of low claims. However, Housing Starts and Building Permits missed expectations, while the Philly Fed index declined M/M but still beat the consensus. Pending Home Sales rose 0.3% M/M, below the 2.0% forecast. Attention overnight will turn to the BoJ rate decision, where a 25bps hike is widely expected. Meanwhile, Fed speak resumes on Friday with Bowman and Schmid scheduled, followed by Williams several times next week. Next week also sees the 2-, 5- and 7-year Treasury auctions. SUPPLY Notes US sold USD 19bln of 10-year TIPS; tail 1.9bps US to sell USD 69bln of 2yr notes on September 22nd, USD 70bln of 5yr notes on Sept. 23rd, and USD 44bln of 7yr notes on Sept. 24th; all to settle Sept. 30th US to sell USD 28bln of 2yr FRN on Sept. 23rd, to settle on Sept. 25th. Bills US sold 4-wk bills at high-rate 3.820%, B/C 3.02x; sold 8-wk bills at high-rate 3.920%, B/C 3.02x US to sell USD 92bln of 13-wk bills and USD 79bln of 26-wk bills on September 21st; all to settle on Sept. 24th STIRS / OPERATIONS Fed Hike Pricing via CME FedWatch: Oct 13.9bps (prev. 12.5bps), Dec 32.2bps (prev. 31.8bps) EFFR at 3.63% (prev. 3.63%), volumes at USD 90bln (prev. USD 100bln) on September 16th SOFR at 3.62% (prev. 3.64%), volumes at USD 2.931tln (prev. USD 2.952tln) on September 16th NY Fed RRP op demand at 0.28bln (prev. 5.38bln) across 3 counterparties (prev. 4) on September 17th Treasury Buyback [Liquidity support, 7-10-year nominal coupons, max USD 4bln]: Accepts USD 2.385bln of USD 9bln offers, accepts 6 of 10 eligible securities