FED: US TSY 5Y TIPS AUCTION: NON-COMP BIDS $143 MLN FROM $26.000 BLN TOTAL

Fed Chair Powell's speech text on the Economic Outlook is available here. His comments don't appear to deviate much if at all from last week's FOMC press conference, hence a limited market reaction. We are expected to have a post-speech moderated Q&A in which attention will be on any deviations from the script. Key comments:

• "Two-sided risks mean that there is no risk-free path. If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2 percent inflation. If we maintain restrictive policy too long, the labor market could soften unnecessarily. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate."
• "In the labor market, there has been a marked slowing in both the supply of and demand for workers—an unusual and challenging development. In this less dynamic and somewhat softer labor market, the downside risks to employment have risen."
• "Uncertainty around the path of inflation remains high. We will carefully assess and manage the risk of higher and more persistent inflation. We will make sure that this one-time increase in prices does not become an ongoing inflation problem."
• "We therefore judged it appropriate at our last meeting to take another step toward a more neutral policy stance, lowering the target range for the federal funds rate by 25 basis points to 4 to 4.25%."
• "This policy stance, which I see as still modestly restrictive, leaves us well positioned to respond to potential economic developments."
• "In recent months, it has become clear that the balance of risks has shifted, prompting us to move our policy stance closer to neutral at our meeting last week."
• "Our policy is not on a preset course. We will continue to determine the appropriate stance based on the incoming data, the evolving outlook, and the balance of risks."

• Treasury futures have rebounded from late morning lows with 10s tapping early session high (112-27.5, +5) after block buy below - now retracing.
• +10,400 TYZ5 112-26, buy through 112-25.5 post time offer at 1218:28ET, DV01 $707,000.
• The contract trades 112-24 last (+1.5)

MEF has announced it will be looking to sell the following at its auction this Friday, September 26:

• E3.50-4.00bln of the new 2.85% Feb-31 BTP (ISIN tba)
• E1.50-2.00bln of the 3.60% Oct-35 BTP (ISIN: IT0005648149)
• E1.00-1.25bln of the 4.00% Apr-35 BTP Green (ISIN: IT0005508590)
• E1.00-1.50bln of the 1.05% Apr-34 CCTeu (ISIN: IT0005652828)