Reply To: Bond Traders Weekly Outlook: Treasuries Rally with Flight to Safety Ahead of FOMC


U.S. Treasuries ended Thursday with losses across the curve after retreating from their early highs.

The trading day started with solid gains in longer tenors while the short end underperformed after leading yesterday’s rally. The market climbed after the overnight session featured news of assistance for Credit Suisse and a rate hike from the European Central Bank. Credit Suisse will borrow up to CHF50 bln from the Swiss National Bank to improve liquidity while the European Central Bank went ahead with its 50-bps rate hike due to a fear that foregoing this increase would spark a panic among investors.

Treasuries added to their early gains even though the market received mostly better than expected data, but they reversed shortly after the 10-yr note and the long bond inched above yesterday’s highs.

The entire complex slid from highs in the late morning, assisted by news indicating that First Republic Bank will receive about $30 bln in deposits from big Wall Street banks. The market continued backtracking into the early afternoon with all tenors finishing near lows.

2-yr: +19 bps to 4.14%
3-yr: +13 bps to 3.96%
5-yr: +16 bps to 3.74%
10-yr: +9 bps to 3.59%
30-yr: +3 bps to 3.71%