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Japanese MOF sells Y4.9024tn 3-Month Bills:


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Choppy day for US FI rates, several exogenous events at play early in the session, while anticipation over whether Fri's April employment report will turn out to be a "monster" or not. First, the exogenous factors:
  • Pre-open chop after the BoE anncd steady rate, slowed the pace of QE but no tapering. Bonds surged to pre-open highs and quickly evaporated with futures gradually extended session lows by midmorning.
  • Rates surged again on of all things .. headlines over fishing rights around Jersey Island with both UK and France briefly sending navy vessels to the region (much more to the story including Brexit differences, threats of cutting off power to the island etc).
  • Tsys see-sawed near top end of range as the Jersey dust-up settled and focus turned to Fri's employ data: mean estimate now +1.0M jobs (73 estimates from +700k low to +2.1M high. Atl Fed Bostic est's +1M job gains for April -- good, but not enough to get him to green-light tapering bond buying, unlike Dallas Fed Kaplan.
  • Couple highlights in Eurodollars: lead quarterly EDM1 +0.010 to 99.83 after 3M LIBOR set's new all-time low: -0.00788 to 0.16200% (-0.01438/wk). Massive put position build: over +145,000 Blue Sep 80 puts 6-6.5 (if NOT a rate hike play, traders think paper hedging taper bets ahead Jackson Hole in August.
  • The 2-Yr yield is up 0.4bps at 0.1546%, 5-Yr is up 0bps at 0.7933%, 10-Yr is down 0.9bps at 1.5572%, and 30-Yr is down 1.1bps at 2.2319%.