This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields dipped across the curve as the yield curve bull flattened with the 2Y yield down 3bp to 4.68% and the 10Y down 9bp to 4.24%. New York Federal Reserve President John Williams said that they are on track to cut interest rates “later this year”, noting that his “view of the economy basically hasn’t changed based on one month of data”. Markets are currently pricing-in three rate cuts of 25bp each in 2024, the first of which is expected to come in June with a 56% probability. Equity markets were mixed with the S&P staying flat and the Nasdaq lower by 0.3%. Looking at credit markets, US IG CDS spreads widened 0.7bp and HY CDS spreads were 2.2bp wider.
European equity markets ended slightly higher. Credit markets in the region saw the European main CDS spreads tighten by 0.3bp while crossover spreads tightened by 3.2bp. Asian equity markets have opened in the red today. Asia ex-Japan IG CDS spreads were 1.6bp tighter.
Sumitomo Mitsui Financial Group Inc hires for $ PerpNC10.25
Bull flattening refers to a change in the yield curve where long-term rates move down faster than short-term rates. This not only has a flattening effect on the entire yield curve but also has a net effect of interest rates moving lower and therefore bond prices moving higher, considered a bull move. On the other hand, the opposite move (interest rates move higher, bond prices move lower) is considered a bear move. In last Friday’s move, 2Y treasury yields were flat while the 10Y and 30Y yields fell 11-12bp making the 2s10s and 2s30s yield curve flatter, a bull flattening move.
On Yield Hunt Back as Bond Spree Lures Risk Takers to Africa
Peter C. Earle, senior economist at the American Institute for Economic Research
“The last time we saw an outbreak of yield chasing akin to this one was in mid-2018 or so… undiscriminating emerging market bidders that we’d seen for many years are probably gone”
Charlie Robertson, head of macro strategy at FIM Partners UK
“The key difference is the direction of US rates. Debt loads are manageable if markets are prepared to roll over debt”
On Bond Markets Flooded With Deals to Fund M&A
Arvind Narayanan, Vanguard
“We do think M&A is going to continue… going to be front and center”
Meghan Graper, global co-head of debt capital markets at Barclays
“The ability to lock in historically low spreads and to appeal to investors who are more motivated by yield”
On Treasury Yields Retreating From 2024 Highs With Month-End in View
Charles Retzky, director at Mizuho Securities USA
“People are buying the long end today ahead of a big month-end rebalancing due to the outperformance of equities versus bonds this month”
On Fed cautious on a rate cut case yet to be made
Goldman Sachs economists
“As strong activity data have piled up, Fed officials have become less concerned about the risk of keeping the funds rate too high for too long”