US Dollar (USD)
Today’s Jan NFP release served as an earsplitting wake-up call for UST bulls as yields careen higher. JPM’s swap spread view.
Dealers suggest only an outlier in the employment report will move the markets today. Duration bulls take heart from the Fed.
BEs decided that enough is enough and tapped themselves out of today’s central bank dovish fest with a modest pull-back.
USTs came off the earlier highs, with some selling pressures likely related to corporate supply pricing. TBAC discussions examined.
Gamma was hit down in a directional move to the underlying rally, with 10y tail gamma leading the move, but is now off the lows.
The BoE jumped on the dovish ease bandwagon while ECB's 50bps hike still resulted in a big rally, sending USTs higher in a lagging move.
Hints from the BOE that sterling rates are near their peak helped global fixed income bull-steepen. But banks expect two more hikes from the Fed.
Powell made familiar cautious noises but also saw the disinflationary process underway, and USTs rallied double digits. Swap spreads widened.
The broader markets manage to squeeze a dovish message out of today's FOMC decision/Powell presser, and BEs followed suit by ending modestly higher.
Going into the FOMC, fast money has sold vol and looks for a big payday post-FOMC. JP Morgan hangs onto its long gamma position despite the softening.