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FI Sell-Off: Like Another FOMC Day Sans FOMC

US FI markets sold off in response to renewed hawkish Fed speak Monday, Tsy yields steadily higher with 30Y tapping 2.5531% late (highest lvls since Aug 2019).
  • Initial weakness after Atl Fed Bostic said uncertainty emanating from war in Ukraine has not altered his view to get going soon on reducing the balance sheet at a faster pace than after the financial crisis, a move that will complement the interest rate path.
  • Like another FOMC day sans FOMC: FI sell-off accelerated early afternoon after Fed Chair Powell's hawkish comments from NABE conf, willingness to make "more than 25bp" hikes at each meeting in order to keep inflation in check if needed.
  • Eurodollar Whites fell as much as -0.225 (EDU2-EDH3 -0.175-0.185 settle) as futures price in combination of 2 full points of rate hikes by year end.
  • Why wasn't Chair Powell more Hawkish at the March 16 FOMC, one trader queried. Another desk pondered today's moves meant either markets under-reacted to the March 16 FOMC or are over reacting today -- maybe a combination of both.
  • Data roundup for Tuesday: More Fed Speak Than Data (Richmond Fed Mfg):
    • 0910ET: NY Fed Wuerffell Sr VP on post-LIBOR world, ISDA webinar, Q&A
    • 1000ET Richmond Fed Mfg. Index (1, 2)
    • 1035ET: NY Fed Williams BIS panel discussion, no text, moderated Q&A
    • 1130ET: US Tsy $34B 52W bill auctions
    • 1400ET: SF Fed Daly Brookings Inst discussion
    • 1700ET: Cleveland Fed Mester on economy, mon-pol, text and Q&A

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