Global rates edged lower, given the risk-off tone but falls have been fairly modest under the circumstances.
UST 10-year yields got a further nudge lower following the soft PPI data and are down 4 bps on the day to 2.21%.
With the MPS not as dovish as some expected, the 2-year swap rate rose by nearly 3 bps to 2.185%.
But half of that gain was before the statement, as prices were marked higher following moves in the offshore session the previous evening.
The overall rates market reaction to the Statement was modest.
Market pricing for the first rate hike remains well into the back end of next year, around September-November 2018. With the hiking cycle seemingly so distant, the short end of the curve should be well underpinned close to current rates for some time.
Longer term swap rates rose by about 4 bps but we expect much of that to be unwound today on the overnight moves.
US CPI data tonight will be keenly anticipated although hopes for a positive surprise have been dashed by the weak PPI data.