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Still Trading Between The Lines


Benchmarks On Track For Weekly Gain


Futures Resume Rise


AOFM Weekly Issuance Slate

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After some early chop w/Tsys and equities reversing late overnight gains, comments from StL Fed pres Bullard on CNBC kickstarted a more hawkish take on FOMC: Bullard DOTS sees liftoff in late 2022, sees Chairman Powell's presser as officially opening the discussion on tapering. Bullard also concerned about feeding into "housing froth", while "leaning toward idea Fed may not need to be in MBS." (MN Fed Kashkari, dove downplayed late: no hike until after 2023).
  • Curve flattening resumed in earnest as long end bounced/traded higher into late morning. Trading desks reported buy stops and forces steepener unwinds as Bonds continued to charge higher ahead midday. 5s30s slipped to 110.568 low.
  • Tsy 30YY fell to 2.002% low, 2.0140% by the close
  • Tsy 10YY fell to 1.4364% low, 1.4414% by the close
  • Large Spd Volume Continues: Near 33,000 Mar'22/Jun'22 spds traded 0.060 recently, additional trades across Whites pushing volumes over 525k for strip, another 244k in first two Reds (EDU2-EDZ2).
  • Carry-over heavy spd activity as prospect of tighter policy sooner than later roils markets: EDU2/EDU3 +4 to .630 Thu, EDU3/EDU4 fell 7.5 to .505, EDH3/EDH4 climbed to 64.5. Blocks: 20k each EDU2/EDU4 and EDZ2EDZ4.
  • The 2-Yr yield is up 4.9bps at 0.2581%, 5-Yr is up 0.7bps at 0.8876%, 10-Yr is down 5.4bps at 1.4498%, and 30-Yr is down 7.1bps at 2.0213%.