[MARKET ANALYSIS] USTs are firmer, but at the lower-end of last week's parameters into Bessent

A modestly firmer start to the week for fixed income. Today, the docket is dominated by US Treasury Secretary Bessent on Iran at 19:00BST, a speech followed by a Q&A which will likely feature questions on last week’s long-end intervention. As it stands, USTs are at the upper-end of 108-08+ to 108-15 parameters. Despite the action taken to essentially pullback long-end yields last Wednesday, USTs themselves are towards the lower-end of that week’s 108-07+ to 108-30 parameters. Given this, Bessent may give commentary to verbally support the action taken. Note, the week also features the BLS preliminary benchmark revision, where any downward revision could knock the Fed from its assessment around the labour market; at the July FOMC, Chair Warsh described it as “solid”, “steady” and “more or less at equilibrium”, commentary that underscored the near-term focus on inflation over jobs. An update is also due from Warsh at Jackson Hole on Friday. However, given his distaste for forward guidance, it remains to be seen whether he will materially update on the economy and/or monetary situation. From a yield perspective, the US 10yr is holding around 4.71%, in the upper half of last week’s 4.63-4.75% band. For the 30yr, the same picture, currently around 5.25% vs 5.17-5.34% from last week. EGBs also bid, but only modestly. Europe is partaking in the Coalition of the Willing meeting in Kyiv, though the French and German leaders are remote due to a Saudi Arabia meeting and domestic political matters, respectively. Currently, Bunds are firmer by around 10 ticks and holding just below the 124.00 handle, toward the mid-point of last week’s 123.60 to 124.44 parameters. Gilts in-fitting, UK specifics light as the focus is on Ukraine and, more pertinently, the above US events. Note, the UK is set to pledge missile support to Ukraine, the financial details of which could be pertinent to the benchmark. As above, Gilts are firmer by about 10 ticks in c. 30 tick parameters, within last week’s 85.81 to 86.73 band.