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MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT FINAL NOV INDEX 71.8

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FED: Powell's Time Looks Up, Replacement Could Be Less Willing To Cut Rates?

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Nothing New From Fed Powell

US TSYS SUMMARY
Tsy yields surged to week high of 1.5536% (compared to 1.6085% high last Thu) while Fed Chair held the normal Fed line: keeping longer run inflation expectations anchored AT 2%, a transient increase in inflation will no effect inflation over longer periods.
  • Tsy futures see-sawed near lows after the virtual Fed Chair Powell event, no bounce as market priced out any hopes of Twist 3.0 that some had hoped would be mentioned before the Fed goes into Blackout at midnight Friday.
  • Jun 10Y futures slipped to 132-11.5 low, still trading within the body of price action from Feb 25. In candle terms the pattern on this day is a bearish standard line - a continuation pattern. Attention on 131-31, Feb 25 low.
  • Not much of an initial react to weekly claims that climbed 9k to 745k, focus on Friday's Feb NFP, +195k mean on wide range of estimates. But a strong bounce after weak Jan gain of +49k will most likely exacerbate the surge in yields.
  • Flow included moderate two-way across curve pre-Powell, better prop and fast$ selling emerged as Fed Powell did not lend credence to Twist 3.0, SLR extension or any other measure ahead of Fed blackout late Friday. Large Red Sep/Dec Spread >80,000 EDU2/EDZ2 spds sold 0.110-0.105. Moderate deal-tied hedging. 10Y Repo fail likely rebound after Tsy annc $120B 3-, 10- 30Y auctions next week.
  • The 2-Yr yield is up 0.2bps at 0.1427%, 5-Yr is up 4.2bps at 0.7736%, 10-Yr is up 6.2bps at 1.5432%, and 30-Yr is up 2.3bps at 2.2989%.
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