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US TSYS: Tsys Curves Flattens Following FOMC, GDP Later

US TSYS
USBulletMarketsFixed Income BulletsNorth America
  • Tsys closed the session mixed post the FOMC. Curve twist flattened, with yields +2bps to -1bps. There were large moves straight after the announcement before losses were pared as Powell gave his press conference. TU closed -0-01⅜ 102-27 were we continue to trade in early morning Asia trading, while TY closed -02+ at 108-30+, however we trade +04+ now at 109-03.
  • The 10yr closed -0.4bps at 4.528%, while the 2s10s fell 2.25bps to 31bps.
  • Powell stated that the current policy rate remains "meaningfully above" the neutral rate, though its exact level is uncertain. He emphasized the Fed's patience in adjusting rates, noting that policy is well-positioned to manage inflation and labor market risks. The Fed held rates at 4.25%-4.5% after three consecutive cuts in late 2024, with Powell indicating no urgency to ease policy further given the economy's continued strength.
  • Former President Donald Trump criticized the Federal Reserve's bank regulation and blamed Chair Jerome Powell for mishandling inflation, though he did not comment directly on interest rates.
  • By the end of the day Fed-dated OIS was pricing in approximately 4bp of easing for the March meeting, down from 7bp of cuts priced pre-Fed while for the year approximately 44bp of easing remained priced vs. 48bp prior
  • Later today we have GDP, Jobless data & Pending Home Sales
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  • Tsys closed the session mixed post the FOMC. Curve twist flattened, with yields +2bps to -1bps. There were large moves straight after the announcement before losses were pared as Powell gave his press conference. TU closed -0-01⅜ 102-27 were we continue to trade in early morning Asia trading, while TY closed -02+ at 108-30+, however we trade +04+ now at 109-03.
  • The 10yr closed -0.4bps at 4.528%, while the 2s10s fell 2.25bps to 31bps.
  • Powell stated that the current policy rate remains "meaningfully above" the neutral rate, though its exact level is uncertain. He emphasized the Fed's patience in adjusting rates, noting that policy is well-positioned to manage inflation and labor market risks. The Fed held rates at 4.25%-4.5% after three consecutive cuts in late 2024, with Powell indicating no urgency to ease policy further given the economy's continued strength.
  • Former President Donald Trump criticized the Federal Reserve's bank regulation and blamed Chair Jerome Powell for mishandling inflation, though he did not comment directly on interest rates.
  • By the end of the day Fed-dated OIS was pricing in approximately 4bp of easing for the March meeting, down from 7bp of cuts priced pre-Fed while for the year approximately 44bp of easing remained priced vs. 48bp prior
  • Later today we have GDP, Jobless data & Pending Home Sales