US Fixed Income Overview: It hurts my Seoul

Despite a firm CPI print, we continue to look for the next Fed hike at the December meeting as recent Fedspeak suggests a more patient Committee overall. With the front end still flagging cheap and the curve appearing too flat, we think 10s/30s steepeners are a low-beta way to get long the front end: we recommend adding tactical 10s/30s steepening exposure, holding onto 10s/20s/30s belly cheapening butterflies, and initiating 1Yx1Y zero coupon inflation swap wideners to position for rising inflation risks into the October FOMC meeting. In rates derivatives we initiate 10s/30s swap spread curve flatteners and maintain shorts in 6Mx30Y versus 1Yx30Y. The November/December SOFR-FF curve has scope for additional flattening given December's $175bn T-bill paydowns and year-end balance sheet dynamics. Spreads widened across products except Agency MBS, which outperformed;