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Pre-FOMC Consolidation, Strong 20Y Auction R/O

US TSYS SUMMARY
Choppy session in rates, day one of two day FOMC vigil. Post-Retail Sales Sell-Off: strong net revisions saw the early bid in Tsys evaporate, better selling from prop, fast$ and program accts in 10s-30s on decent volumes.
  • No real trigger, but after SPUs marked new all-time high (ESM1 3970.75) around midmorning, waves of midday consolidation took the hot air out of stocks.
  • Focus turned to the 20Y Bond auction w/Tsys trading heavy (10YY1.6144%, 30YY 2.3879). 20Y Swap spd narrowed, cash 20s hammered, specs/prop desks set up for another debacle on par w/7Y auction.
  • Option desks back to better buying of puts all morning but volumes not exceptionally large, no significant adds or openers ahead Wed's FOMC. FOMO: Go-along steepener interest, curves near Feb 25 multi-yr highs again (5s30s 158.3).
  • Rates Gapped higher after strong 20Y stopped 2.5bp through $24B 20Y: 2.290% (1.920% last month) vs. 2.315% WI, bid/cover 2.51 vs. 2.15%.
  • See-saw action continued through the close: post auction bid gave way to renewed consolidation in stocks, wash/rinse/repeat after the bell.
  • The 2-Yr yield is down 0.6bps at 0.145%, 5-Yr is down 1bps at 0.8176%, 10-Yr is up 0.4bps at 1.6092%, and 30-Yr is up 1.7bps at 2.3746%.
BulletMarketsFixed Income Bullets
BulletMarketsFixed Income Bullets

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