USD Swaps: Pricing in more cuts post-JOLTS

Hedge cutting
The front end of the curve saw a lasting bid throughout the session after the weaker than expected JOLTS data. The UST and swap curve steepened.

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  •  Pricing in more cuts post-JOLTS  

  • New issues


      Pricing in more cuts post-JOLTS    

    Treasuries end the session with heady gains in the front end, with front and red EDs rallying as much as 20bps and the 2y note yield last 13bps lower 3.82%. 2s10s is 6bps steeper at -49,5bps while 5s30s rose 8.2bps to 21bps. Equities ended lower (DJIA -0.6%, S&P -0.74% and Nasdaq -0.56%).  Looking at the price action today, one trader noted that the markets were better bid for sure, but in an organized fashion. There was “no panic” but “just better bid with the fronts up 20bps.” With today’s move, EDs futures are back to pricing in more than three 25bps cuts by year end.   


    The swap spread curve stayed steeper on the day amid continued low volumes.  In IG new issuance, $3bn priced in addition to a hefty $10.25bn in SSA supply in 3y, 5y and 10y. Weekly total for IG (ex-SSA) now stands at $6.55bn versus an expected $15bn.


    Looking at the JOLTS data, analysts at Barclays find that that the drop in JOLTS data today “suggests that policy tightening may be gaining traction on labor demand… although February's openings remained elevated.” Moreover, the bank highlights that the decline in openings “does correct some of the substantial imbalance between supply and demand, albeit on the heels of more rapid progress from July to November 2022.”


    Overall, Barclays judges “the Fed still has work to do to cool labor demand and wages, but these data suggest that hikes are gradually working to slow activity.” That said, Barclays points out that preliminary indications from data - which Barclays find to be “a useful advance indicator of job openings” - suggest that openings “likely moved up a bit in March despite the turmoil in the banking sector.”


    After the JOLTS estimates, Barclays continues to expect the March employment situation estimates “to point to a tight and resilient labor market, with payrolls employment increasing +250k and private payrolls up 225k.”


    2s +2.625bps (-1.125bps), 3s -12.25bps (-1.5bps), 5s -23bps (+0.125bps), 7s -30.875bps (+0.125bps), 10s -29.75bps (unch), 20s -65.125bps (+0.5bps), 30s -70.5bps (+0.5bps).



    New issues


    • Quebec is working on a 5y benchmark via BofA, CIBC, JPM, RBC and TD.  Aa2/AA-/AA-.  Price talk: SOFR MS + 58bps. Expected to price tomorrow.


    • WEC Energy launched a $250m tap (4.75% 2026) via Barclays and TD.  Baa1/BBB+/BBB+.  +100bps. Total outstanding now $900m.  


    • Pilgrim’s Pride priced a $1bn 10y benchmark via Barclays, BofA, BMO, Citi, MIZ and RBC.  Na3/BBB-/BBB-. +300bp.


    • CNH Industrial Capital priced a $600m 5y benchmark vvia MUFG, Citi and DB.  Baa2/BBB/BBB+. +140bps.


    • Jackson National Life priced a $300m 5y FA-backed deal via BofA, DB, JPM and WFS.  A2/A/A.  +187.5bps.


    • MassMutual priced a $750m FA-backed 3y fixed via BofA, DB, JPM and MS.  Aa3/AA+/AA+.   +90bps. It dropped plans for a 3y FRN.


    • KfW priced a $3bn 3y Global at swaps +20bps. Leads are DB, HSBC and JPM.


    • World Bank priced a $5bn long 5y Sustainability Global at swaps +37bps. Leads are Citi, RBC, TD and WFS.   


    • IADB priced a $2.25bn 10y Sustainability Global at swaps +53bps. Leads are BMO, BofA, DB and MS.