Bond Traders Weekly Outlook: Flipping Between End of Inflation and Hawkish Fed Trades

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    U.S. Treasuries trade above their lows that were reached just before 11:00 ET.

    The market inched up off lows in late morning trade, but the shallow bounce was followed by a bit more selling in recent trade, which has returned yields toward session highs.

    The early selling has lifted the 30-yr yield back above its 200-day moving average (3.616%) while the 10-yr yield remains about eight basis points below the 200-day moving average of its own

    Equities have climbed off their lows, but they remain in negative territory with the Nasdaq (-0.5%) remaining a bit behind the S&P 500 (-0.3%).

    2-yr: +4 bps to 4.00%
    3-yr: +3 bps to 3.78%
    5-yr: +3 bps to 3.53%
    10-yr: +2 bps to 3.42%
    30-yr: +1 bp to 3.63%


    U.S. Treasuries hold modest losses after dipping from their opening levels.

    Past hour has seen some more selling, which lifted yields back to yesterday’s highs. Equities are off to a flat start with the S&P 500 (+0.1%) holding a slight gain while the Nasdaq (-0.3%) lags.

    13:00 ET: $40 bln 3-yr Treasury note auction results

    March NFIB Small Business Optimism Index (actual 90.1; prior 90.9)
    World Bank raised its 2023 global growth forecast to 2.0% from 1.7%.
    The Bank of Korea left its base rate at 3.50%, as expected.
    Japan will chair a meeting of G7 finance leaders in Washington tomorrow.

    2-yr: +1 bp to 4.01%
    3-yr: UNCH at 3.78%
    5-yr: +1 bp to 3.53%
    10-yr: +2 bps to 3.43%
    30-yr: +1 bp to 3.64%


    Gilts and EGBs are underperforming US Treasuries with European yields up by 10–14bps in 2s and in a 2s10s bear flattener move.

    European markets are catching up to developments including nonfarm payrolls after being shut for Good Friday and Easter

    Ahead: 13:00 ET: $40 bln 3-yr Treasury note auction results


    U.S. Treasuries of most tenors retreated on Tuesday, lifting yields to one-week highs ahead of tomorrow’s release of the CPI report for March (consensus 0.3%; prior 0.4%).

    Treasuries lows right at the completion of today’s $40 bln 3-yr note sale, which met good demand, and finished the day just above those levels.

    Chicago Fed President (FOMC voter) Goolsbee said that the Fed should be careful about raising rates too aggressively until there is more evidence about progress in taming inflation.

    2-yr: +5 bps to 4.05%
    3-yr: +4 bps to 3.82%
    5-yr: +3 bps to 3.55%
    10-yr: +2 bps to 3.43%
    30-yr: -1 bp to 3.62%


    Early Bonds U.S. Treasuries slightly lower

    March PPI fell 0.5% m/m (consensus +0.1%) following upwardly revised 0.0% (from -0.1%) The key takeaway is that producers are seeing some welcome disinflation, aided by declines in energy prices; however, the stickiness of core CPI in March has offset some of the excitement about the improvement in the PPI data in March.

    2-yr: -5 bps to 3.92%
    3-yr: -6 bps to 3.64%
    5-yr: -6 bps to 3.42%
    10-yr: -4 bps to 3.38%
    30-yr: -3 bps to 3.62%


    U.S. Treasuries fell further Friday, widening this week’s losses in all tenors. Treasury yields responding to an increase in year-ahead inflation expe
    [See the full post at: Bond Traders Weekly Outlook: Flipping Between End of Inflation and Hawkish Fed Trades]

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