USTs – Flattening-Friendly Outlook

The U.S. Treasury curve flattened on Monday with long-end yields modestly falling (30y 3.13, -1.4 bps). Rate hike timing has dropped to 1.7 for the next 12 months (including December 2018). But, we began to see 5-year yields finally...

USTs – Balanced Outlook

U.S. Treasuries (10y 2.85, -4.3 bps) gathered more risk-off flows with equities probing their worst levels from October. FOMC rate hike timing has dropped to two for the next 12 months according to OIS. Markets have not maintained a...

USTs – Rich to Fair Value

The U.S. Treasury curve (5y30y 37.7, -5.7 bps) abruptly flattened as concerns brew over slowing global growth making its way stateside. Inflation expectations have soured to overtly pessimistic levels, reflecting a less than 20% probability headline CPI is capable...

TIPS Breakevens – Relief Rally Continues

 AQA Comments:  Breakeven spreads widened again as the relief rally from a less aggressive Fed continued. Fed pressure to reduce financial leverage remains a significant concern, but for now markets appear focused purely on a potentially shallower path for...

USTs – Short-end Outlook Turns Bearish

U.S. 10-year yields (3.03, -2.7 bps) led a modest rally on Thursday while markets digest supposedly dovish morsels from Powell and the Nov 7/8th Fed minutes. We have noted falling agreement among officials according to statements found within communications...

USTs – Powell Hints at Nearing Pause

Short-end yields dropped (2y 2.81, -2.2 bps) in response to seemingly dovish comments by Powell. Most notably, eurodollar futures solidified the one and done theory for hikes in 2019. Powell is likely awaiting the lag of prior tightening to...

USTs – Real Yields Pop

The story on Tuesday was about real yields popping higher (10y 1.14, +4.6 bps) while nominal yields barely budged. Inflation expectations are quickly cratering across the curve, likely to a degree the Fed will notice. Options markets are reflecting...