[MARKET ANALYSIS] US yields remain bid post-FOMC, supply in focus for the near-term

• USTs are, once again, near-enough flat. Holding off lows in 111-16+ to 111-26 confines. Post-FOMC, updates have been light. In brief, the Fed held policy in a decision subject to two dovish dissenters (Miran & Waller), the statement outlined a more optimistic outlook on the economy and labour market. Thereafter, Chair Powell outlined that if the tariff effect peaks in 2026, then this would tell the Fed that policy could be loosened.
• Overall, the statement and presser kept the narrative around the Fed largelly unchanged, though the omission of the line around "downside risks to employment" gave a slight hawkish tint to the statement. A point that was reflected in the upside at the short-end of the yield curve at the time. This morning, yields are bid across the curve, which itself is a touch steeper, with the 10yr back above 4.25%, though shy of last week's JGB-induced 4.31% YTD peak.
• As a side point, the dissent by Waller potentially keeps him in contention for the Chair role, and indeed the odds for Waller on Polymarket have ticked to above 17% post-Fed. Though, while off highs, Rieder and Warsh remain the two favourites at c. 34%. In terms of timing, Treasury Secretary Bessent suggested Trump's announcement could be in the next week or two.
• EGBs are essentially flat this morning. Bunds are in a narrow 127.87 to 128.04 band. Earnings are once again dominating European newsflow, with the DAX 40 underperforming on account of SAP, though Bunds themselves don't appear to be reacting.
• BTPs also contained, awaiting BTP and CCTeu supply shortly.
• Gilts gapped lower by just over 10 ticks before slipping to a 90.48 trough, catching up to the modest pressure seen in peers overnight. For the UK, the PM's meeting with Chinese President Xi saw mixed commentary. Ahead, we have a tender auction.

US Treasury yields are showing strength following the recent FOMC meeting, suggesting a maintained upward trend in bond markets as economic optimism prevails. The absence of previously noted downside risks to employment in the Fed's statement may imply future possibilities for tighter policy, influencing investor sentiment toward yields. Keep an eye on upcoming supply events, especially as they could drive market dynamics in the near term.