FREELAND: CANADA WON'T ESCALATE OR BACK DOWN ON US TRADE FIGHT

MNI: PBOC To Aim To Drive Inflation Higher- Advisors

MNI: China To Issue More Bonds As Stimulus Targets Consumption

MNI: PBOC To Aim To Drive Inflation Higher- Advisors

MNI: China To Issue More Bonds As Stimulus Targets Consumption

MNI BRIEF: China Nov M1 Decline Narrows, M2 Slows

EZ/UK T-Bill Calendar: 8/13/28/50-Week BTF Auction on Monday

EZ/UK Bond Supply Calendar: 4.125% Jul-29 Gilt Due on Tuesday

MNI: CANADA OCT WHOLESALE SALES +3.3%; EX-AUTOS +0.5%

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Curves Crater, Reflation Trade Reversed

US TSYS SUMMARY
Post-FOMC: Reflation unwinds, slow to get underway but inexorable bull curve flattening into the second half. Little post-claims chop as Bonds started climb higher after weekly claims climb (+37k to 412K vs. +360k exp), continuing claims +3.518M vs. +3.425M exp.
  • Thu's bull flattening largely result of Wed's FOMC, upping DOTS to pencil in two rate hikes by late 2023. Some technical buying while shorts caught wrong-footed, forced to unwind, exacerbating the move. Long end Tsy Bonds clawed higher, 30YY fell to 2.0468% low (mid-Feb level), 10YY around 1.5% after slipping to 1.4702% low -- stable by comparison.
  • Aside from tight stops getting triggered on the rally in long end, curve steepener unwinds contributed: TD Securities reports they are taking off a 5s30s steepener as well as 9Y TIPS BE position. TD explained "reflation trades suffered a significant setback after the Fed delivered a hawkish message at the June FOMC — raising the 2023 dots, upgrading the SEP, and sending a message that tapering discussions had begun. This more hawkish message has led to a significant paring of reflation trades, with short covering exacerbating the moves.
  • TD added the "initial curve steepening was driven by a selloff in the 5y sector as the market pulled forward tapering and hike expectations. However, the flattening has been replaced by short-covering buying, exacerbating the move."
  • The 2-Yr yield is up 0.6bps at 0.2113%, 5-Yr is down 2.1bps at 0.8744%, 10-Yr is down 6.6bps at 1.5091%, and 30-Yr is down 10.9bps at 2.0982%.
BulletMarketsFixed Income BulletsHomepage
BulletMarketsFixed Income BulletsHomepage

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.