[MARKET ANALYSIS] Fixed contained in limited conditions, US data ahead
- Fixed benchmarks are flat amid mass market closures with liquidity thin and the docket sparse.
- USTs in a narrow 110-17+ to 110-22+ range, awaiting Final Manufacturing PMI and then the ISM Manufacturing figure thereafter. Today's docket also has Fed's Miran; reminder, as Powell has indicated he will remain at the Fed once he is no longer Chair, Miran will likely vacate his spot for Warsh.
- Gilts gapped lower by 15 ticks and then slipped to an 86.36 low, though comfortably above Thursday's 85.90 contract base. No move to the Final Manufacturing PMI, which unsurprisingly points to marked price pressures and frontloading of purchase activity.
- Ahead, BoE Chief Economist Pill is due; Pill was the sole hawkish dissenter in April, and sees the risk of second round effects as being to the upside vs the three scenarios, calling for a "prompt but modest hike" to "help mitigate upside risks to price stability".
Context
Fixed income markets are showing limited movement due to thin liquidity and a sparse economic calendar, awaiting significant US data releases. The narrow trading range of USTs reflects market anticipation of the Final Manufacturing PMI and ISM Manufacturing figures, which could provide clues about inflationary pressures and influence Fed policy. In the UK, Gilts are under pressure but remain above recent lows, with commentary from BoE Chief Economist Pill highlighting potential hawkish sentiment ahead of upcoming meetings.
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