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Early Risk Off Sees 10YY Dip Below 1.0% Briefly; Fed On Hold

US TSYS SUMMARY
Rates trade firmer after the bell -- but well off midmorning session highs, even after equities trade broadly weaker, near late session lows (ESH1 -93.0).
  • Chair Powell Q&A ongoing covers broad subject range: racial equality root of employ mandate, housing bounce ephemeral, signs of stronger H2, Fed not out of tools.
  • Rates had held narrow range/near highs in 4+ hour lead-up to FOMC annc., break lower late. Not much of a react to steady FOMC policy annc, patient Fed view on inflation, ending term repo ops, too soon to consider tapering QE, econ recovery tied to progress in vaccines/getting virus spd under control.
  • Early risk-off on headlines re: EU concern over Astrazeneca vaccine supply.
  • On Tsy futures rally to session highs, 10YY dropped below 1.0% to 0.9992% for first time since Jan 6 after spending much of 2020 between 0.90%-0.55%. Robust volumes on muted risk appetite, TYH1 >750k (>100k on initial move) off of ECB headlines re: officials say markets underestimate chances of rate cuts.
  • The 2-Yr yield is down 0.2bps at 0.1191%, 5-Yr is up 0.4bps at 0.4129%, 10-Yr is down 1.4bps at 1.0212%, and 30-Yr is down 0.4bps at 1.7865%.
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