SECURITY: President Putin Denies Russia Is "Threatening Europe"

• RES 4: 112-16   61.8% retracement of the Mar 2 - 27 bear leg 
• RES 3: 112-07   High Mar 18
• RES 2: 111-31   50.0% retracement of the Mar 2 - 27 bear leg 
• RES 1: 111-27+ High Apr 17
• PRICE:‌‌ 110-15+  @ 17:27 BST Apr 29
• SUP 1: 110-12+ Low Apr 29
• SUP 2: 109-24   Low Mar 27 and the bear trigger
• SUP 3: 109-22+ 1.764 proj of the Mar 10 - 13 - 18 price swing
• SUP 4: 109-12   2.000 proj of the Mar 10 - 13 - 18 price swing

Treasuries have opened a decent gap with last week’s highs, leaving key short-term resistance defined at 111-27+, the Apr 17 high. Support at 110-16, the Apr 2 low, has broken - a bearish development that exposes the bear trigger of 109-24. Any renewed rally needs to push prices through 111-27+, before 111-31, the 50% retracement for the Iran War bear leg, can be tested. Clearance of this retracement level would strengthen any bullish theme. 

• Futures back under pressure after drawing some short covering in lead-up to this afternoon's FOMC policy annc.
• -35,000 FVM6 sold from 107-24 to -23.25 last few minutes, still off midday low of 107-22.5 however.

While the vast majority of analysts expect the FOMC to retain its implied easing bias in the Statement, many see risks that forward guidance (“In considering the extent and timing of additional adjustments to the target range”) shifts hawkishly to a more balanced/two-sided phrasing. A couple (Barclays and Wells Fargo) have a change in guidance as their base case for this meeting.

• Tweaks are seen possible to the opening paragraph describing economic conditions, with some eyeing economic activity now described as “moderate” vs the prior “solid”, and/or job gains to “modest” vs the prior “low”, though inflation is expected to still be described as “somewhat elevated”. Selected analysts on the forward guidance:
• Barclays: “by removing in the statement the word “additional” when referring to upcoming rate adjustments, the FOMC would signal that it no longer views the next policy rate change as necessarily continuing the recent cutting cycle. This would suggest that it has a more balanced view about its next rate move and would reinforce expectations of policy on hold for the rest of the year.”
• BofA: “The big question is whether the forward guidance language in the statement will indicate that risks to policy are two sided. We think it won't, but it's a close call.. One way to do this would be to change the reference to "additional adjustments" to the policy rate in the forward guidance language to "any adjustments" or simply "adjustments". This would indicate that the next move wouldn't necessarily be in the same direction as the previous one.”
• Deutsche: “A more hawkish posture could come from a modification of the language around “additional adjustments” or by describing risks to the dual mandate as (roughly) balanced…Hawkish versions of the statement could drop “additional”, which indicates a dovish bias by implicitly signaling the continuation of a series of rate cuts...we see June as better placed for such a change"
• Goldman: Likely to leave guidance unchanged. “recent comments from participants indicated that most still expect the next move to be a cut, and there is little additional reason to make a change now that the FOMC chose not to in March” but “small changes to the statement to note the better labor market news and higher inflation numbers”.
• JPMorgan: "No change to rate guidance. “The main change that we anticipate in the statement will be to now characterize the unemployment rate as “low,” in keeping with past wording when the u-rate was where it is now. The last statement described growth as “solid.” With the last two quarters perhaps averaging growth around 1.5%, there may be a case to soften that to “moderate.” "
• Morgan Stanley: “We do not read Fed speak as suggesting the committee has – or is prepared – to move to two-sided rate guidance.”
• NatWest: On guidance, “we expect that the Fed opts for a somewhat market-friendly statement by leaving the current language fully intact”. “uncertainty is still so high that there is no need for changes to the statement other than a very slight update in the capsule description of the economic outlook in the first paragraph given the backlog of shutdown-related delays to economic reports have nearly caught up.”
• Nomura: “we expect mark-to-market adjustments to the first paragraph on their assessment on labor markets, but the language on policy forward guidance will likely remain unchanged… However, we do see some risk of an adjustment to the guidance language.”
• UBS: “We suspect just given inertia in statement language, combined with the high degree of uncertainty surrounding events in the Middle East, there could be room for disappointment to those expecting material change.” “For this FOMC, the next move could be either a hike or a cut. In that sense a balanced risk assessment might be appropriate, and we give it close to even odds that happens this meeting….However, [the existing guidance] language is already so benign we suspect that it remains unchanged.”  A hawkish incremental shift could revolve around the risks paragraph, eg the Iran war “has increased the risks inflation remains elevated.”
• Wells Fargo: “The Committee is likely to emphasize optionality in its statement. We expect it to note that higher energy costs are keeping inflation elevated and to soften forward guidance, replacing language around “the extent and timing of additional adjustments” with more open‑ended phrasing that references “future adjustments” to the policy rate.”