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Yields Higher As BoE and Norges Bank Deliver 50bp Hikes

US TSYS

TYU3 is currently trading at 112-23+, in line with NY closing levels.

  • Cash tsy yields finished 6-9bp higher across major benchmarks with the 5-year leading.
  • Global yields rose due to actions taken by central banks. The BoE delivered a hawkish surprise by hiking 50bp to 5.0%, bringing the total tightening this cycle to 475bp. The Norges Bank also surprised with a 50bp hike and maintained a tightening bias.
  • Little reaction to Fed Chairman Powell's second day of policy testimony to Congress and the lengthy Q&A that followed. Chair Powell reiterated the prevailing view that if the economy continues to perform as expected, it would be appropriate to raise rates again this year. He did however add that the "FED VERY AWARE, CONCERNED ABOUT COMMERCIAL REAL ESTATE”, and may raise capital requirements for large banks (>100B) by as much as 20%.
  • On the economic data front, US initial jobless claims continued their upward trend, exceeding expectations at 264k, which is slightly higher than the upwardly revised figure from the previous week.

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