[MARKET ANALYSIS] Fixed income contained into Payrolls, USTs outperform peers

A contained start to the final session of the week for fixed, with the market now waiting for US NFP and a concrete update on the situation between the US and Iran.
USTs in a narrow 108-13 to 108-17 parameter, into Payrolls. Proxies into the print have been mixed, weekly claims hit nearly a 60yr low, but in contrast the ADP figure was below consensus. Similar divergence seen across other indicators, such as ISM. While pertinent, the main focus for the Fed is on the inflation side of the mandate, as officials continue to characterise the labour market as stable. As such, next week’s CPI may prove more influential, particularly after the FT sources piece on Thursday, which enhanced the focus on such prints into the next FOMC.
Bunds and Gilts are also relatively contained, though with a bearish bias and are posting downside of around 20 ticks. Specifics for the space are a little light, the focus is firmly on the above factors. Bunds lower in a 124.71-89 band, while Gilts are off worst in 87.09-38 confines.

What our latest note said

US Market Open, 23 Oct, 10:15 UTC · what it led with

US President Trump says the US crushed Iran, and may want to do it a "little more".

Crude benchmarks firmer on ongoing tensions in the Middle East; recent bout of strength comes after the Houthis launched another missile towards Saudi interests.

Headlines that moved markets

FX headlines from our feed, and what the market did next.

Fed’s Waller (voter) says more rate hikes are likely needed to tame inflation, but there is flexibility over the pace and hikes do not need to be consecutive.

DXY+0.1%

Japan's GPIF didn't discuss allocation at its September meeting, Bloomberg reports.

USD/JPY+0.1%

Japanese FX Official Mimura says they are closely watching to see if markets take the clear message they are giving at face value. Not satisfied with or reassured by recent JPY action.

USD/JPY−0.5%

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[MARKET ANALYSIS] Fixed income contained into Payrolls, USTs outperform peers

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