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Markets Update, Rates Pare Gains, Curves Flatter, Stocks Firmer

US TSYS
  • Treasury futures still well bid across the board are scaling back support ahead midday, yield curves well off steeper levels (2s10s appr 10bp off highs at -97.80) amid consistent selling in short end as 2Y yields climb appr 15bp off lows to 4.7293%.
  • Driver likely the rebound in bank shares as banks themselves and regulators move to quell panic over liquidity issues following the rout in Silicone Valley Investment Bank (SIVB) since yesterday (FRC +90% off lows, SBNY -4.5%, TFC -3.0%). First Republic Bank says deposits strong, portfolio well diversified.
  • Equities dip after latest headline on SVIB: SILICON VALLEY BANK CLOSED TODAY BY CALIFORNIA REGULATORS: FDIC
  • Fed terminal rate has climbed to 5.37% from 5.25% low in August'23. Fed funds implied hike for Mar'23 at 36.1bp (+2.5), May'23 cumulative 63.8bp (+2.5) to 5.199%, Jun'23 76.4bp (+5.3) to 5.330%.

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