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So Long SLR Exemption


Some decent movement and heavier volumes in rates on a zero data session. Two main factors at play:

  1. Tsys bounced overnight on apparent reversal of what spurred sell-off on prior overnight session: Nikkei report that the BoJ will widen 10Y JGB yield band +/- .25% vs +/- 0.2% around zero) at Fri's policy annc. During Fri Asia hours Bbg headline spurred short cover bid: KURODA: BOJ CLARIFIED ITS VIEW ON YIELD TARGET RANGE. Apparently, Kuroda had previously expressed his belief that there was no need to widen the band.
  2. Treasuries sold off midmorning when the Fed confirmed they would let the Supplementary Leverage Ratio (SLR) exemption expire as planned on Mar 31. Rates recovered following the initial gap sale: after much speculation over the past few weeks over what would happen if the exemption wasn't extended, fear of forced unwinds by financial institutions was unwarranted. FED CONFIDENT ALLOWING RULE TO EXPIRE WILL NOT IMPAIR TREASURY MARKET LIQUIDITY OR CAUSE MARKET DISRUPTION- FED OFFICIALS," Rtrs.

Markets calmed in second half, geo-pol angst simmered after some misc Pres Biden headlines, will speak to Russia's Putin "at some point"; also "U.S. SEEKS `PREDICTABLE AND STABLE' TIES WITH RUSSIA" Bbg State Dept Reeker on Blinken's trip to Brussels. Nothing really market moving from a geopolitical standpoint, but Tsys are bouncing off low end of range with equities bouncing as well: ESM1 near steady.

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