[MARKET ANALYSIS] USTs slightly softer pre-Fed, Bunds await supply, JGBs bid overnight

• JGBs were bid overnight. Initial gains were exacerbated by a strong 40yr auction, which helped lift the benchmark to a 131.77 peak with gains of just under 50 ticks at best. That aside, focus was on the commentary from Trump around Japan and China always wanting to devalue their currencies. Remarks which may have weighed on Japanese yields from the start of trade.
• USTs treaded water overnight in the typical pre-FOMC holding pattern. Since, a bout of pressure has emerged with USTs down to a 111-21 base, lower by 4+ ticks at most. For the Fed, the full Newsquawk preview is available, rates are expected to be unchanged in the 3.50-3.75% band, focus will be on the number of dissents, any change to the statement language around the labour market and/or additional adjustments. From Chair Powell, the focus will be on how he frames the hold and any commentary around the neutral rate, in that context.
• Elsewhere, the WSJ reported overnight on the four Fed Chair finalists, with individuals cited reportedly concerned that none of the finalists fully satisfy Trump's requirements.
• Bunds have been grinding higher across the morning. To a 128.12 peak as, despite strong ASML earnings, European sentiment finds itself on the backfoot, ex-AEX, with pressure in heavyweights such as LVMH. For Europe, ex-equities, the docket is light. No move to ECB speakers thus far, who have stuck to the script. For Bunds, we await results from a 10yr auction shortly.
• Gilts opened higher by 10 ticks, at a 91.11 peak, before fading back to the figure where it remains. As such, the benchmark is near-enough flat on the day with UK specifics light and the bias likely a contained one into the Fed.

The U.S. Treasuries (USTs) are seeing slight downward pressure as the market awaits the Fed's FOMC meeting, trading in a typical pre-meeting holding pattern. Meanwhile, Japanese Government Bonds (JGBs) have experienced gains due to a strong auction, but Trump's commentary about currency devaluation pressures may weigh on yields. Bunds are edging higher in a subdued European market ahead of an upcoming auction, indicating mixed sentiments across sovereign bonds as investors prepare for significant central bank guidance.