US Dollar (USD)
A more hawkish than expected FOMC dot plot essentially sent all major asset classes lower with TIPS/BEs far from unscathed today.
The FOMC did what CPI could not, with a substantial repricing in the belly of the curve, sending 2s5s30s to new highs for the year. Spreads widened
Vols rose, somewhat tepidly, considering the delivered vol post-FOMC. ULC traded along with 2y10y. Earlier, a 5x7 wedge and a 30y accreter dealt.
The financial landscape remains in a literal holding pattern ahead of today’s FOMC decision where no fireworks are expected by sources/dealers.
Traders and strategists await the Fed decision. Front FRA-OIS widens, Brevan increases its USD rates short and adds crypto.
The BOE-FCA today encouraged liquidity providers to switch to 'SOFR First' from July 26 after a survey found almost 100% support for the move.
Intermediate vols in 10y tails from 1y10y to 5y10y saw selling this afternoon as a light bid this morning was sold, on possible clean up activity.
A much stronger-than-expected May PPI print gave another point to Team Reflationista. BEs bull flattened as better TIPS/BE selling abated.
USTs remain a tad softer in the wake of today’s strong PPI print and JP Morgan favors leaning bearish USTs into tomorrow’s FOMC.
Structured note activity slowed down amid the underlying squeezy rally in USTs. ZCs included a large Barclays Formosa, late to the screens.