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Weaker But Off Lows, Little React to May 1 FOMC Minutes

US TSYS
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  • Treasuries drifting near midrange for the day after the bell, not a major reaction to the May 1 FOMC minutes.
  • Tsys largely mirrored moves in EGBs during overlapping hours - trading weaker after higher than expected inflation data via UK CPI overnight. Treasury futures climbed off early session lows to late morning session highs, in-line with a recovery in Gilts.
  • Little react to Existing home sales miss in April at 4.14m (cons 4.23m) after an upward revised 4.22m in March (initial 4.19m). The latest profile leaves sales -1.9% M/M in April after a smaller than first thought decline of -3.7% M/M in March, still retracing the surprise 9.5% jump in Feb.
  • Main focus was on the FOMC minutes: “Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%,” the minutes said. Some officials also appeared willing to contemplate interest rate increases if conditions appear to worsen.
  • Rate cut projections are slightly lower vs. late Tuesday levels (*): June 2024 at -5% w/ cumulative rate cut 0bp at 5.323%, July'24 at -16.0% (-20%) w/ cumulative at -5.2 (-6.3bp) at 5.283%, Sep'24 cumulative -17.8bp (-19.9bp), Nov'24 cumulative -25.6bp (-27.6bp), Dec'24 -40bp (-43.7bp).
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  • Treasuries drifting near midrange for the day after the bell, not a major reaction to the May 1 FOMC minutes.
  • Tsys largely mirrored moves in EGBs during overlapping hours - trading weaker after higher than expected inflation data via UK CPI overnight. Treasury futures climbed off early session lows to late morning session highs, in-line with a recovery in Gilts.
  • Little react to Existing home sales miss in April at 4.14m (cons 4.23m) after an upward revised 4.22m in March (initial 4.19m). The latest profile leaves sales -1.9% M/M in April after a smaller than first thought decline of -3.7% M/M in March, still retracing the surprise 9.5% jump in Feb.
  • Main focus was on the FOMC minutes: “Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%,” the minutes said. Some officials also appeared willing to contemplate interest rate increases if conditions appear to worsen.
  • Rate cut projections are slightly lower vs. late Tuesday levels (*): June 2024 at -5% w/ cumulative rate cut 0bp at 5.323%, July'24 at -16.0% (-20%) w/ cumulative at -5.2 (-6.3bp) at 5.283%, Sep'24 cumulative -17.8bp (-19.9bp), Nov'24 cumulative -25.6bp (-27.6bp), Dec'24 -40bp (-43.7bp).