SGS-swap spreads (defined as yield less SORA) may stay relatively cheap for a few more months. There are two main considerations. First, there are no more SGS issuances for the rest of the year. All else equal, we would reasonably expect SGS to trade somewhat expensive compared to SORA OISs. This is in stark contrast to USTs where supply overhang remains a persistent issue and USTs trade cheap relative to SOFR OISs. SGS supply would be a factor as we head into 2025, but that is still several months away. Second, worries about the Fed being less dovish than anticipated would likely drive SORA swaps more than SGS yields. Note, that during the period where the Fed was hawkish (3Q22 to 3Q23), SGS-swap spreads were trading largely inverted (SORA OISs higher than yields). Something similar may be playing out right now, albeit to a smaller extent. Even though the Fed kicked off easing with a 50bps cut last month, firm economic data thus far is fuelling speculation that the easing cycle may be shallower than indicated. Moreover, US fiscal worries could also come to the fore if Trump gains momentum heading into US elections in November. Accordingly, pay flows in SORA could be more apparent as USD rates rise. SGS-swaps, which look cheap (SGS look expensive), could get cheaper. 
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