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Treasury Curve Steepens On Fed Projections

US TSYS
Treasury futures look to finish the session mostly higher/off highs after the Fed held rates steady while projecting three rate cuts by the end of 2024.
  • Jun'24 10Y futures briefly made new lows post FOMC of 110-01+, before recovering to close the day at 110-14. As trading gets underway 10y futures are a touch higher up 00+ at 110-14+, after briefly touching 110-16 on the open.
  • Looking at technical levels: The contract traded lower Monday piercing 109-25+, reinforcing a bearish theme. A clear break of this support would confirm a resumption of the downtrend that started late December levels to watch to the downside 109-24+ (Mar 18 low), further down 109-14+ (Nov 28 low), while to the upside initial resistance is seen at 110-24 (20-day EMA), while above here 111-02 (50-day EMA), a break above here would open a retest of 111-24 (Mar 12 high),
  • Treasury curves bull steepened on Wednesday with yields finishing 2-9bps lower, the 2Y was -8.1bps to 4.602%, 10Y -2bps to 4.272%, while the 2y10y is +6.315 to -33.163.
  • Fed Funds implied rates have fallen in two steps over the FOMC decision and press conference. Cumulative cuts: 4bp May (3bp pre-FOMC), 20.5bp Jun (from 17.5bp), 32.5bp Jul (from 28bp) and 83bp Dec (from 75bp).
  • Looking ahead: focus turns to Thursday's Wkly Claims, S&P Global US PMIs, Home Sales. Fed VC Barr fireside chat "View from the Fed", Q&A at 1200ET.
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