US Dollar (USD)
1y2y, 2y1y and 3m2y all pushed higher today and dealt in good size as the ULC shot higher. Intermediates see a steady bid. 2y10y, 1y30y skew trades.
Back end yields plummeted while front and red EDs have sunk further. Long end spreads gained with the flattening tumult. SocGen previews 7y.
The front end is off the lows and long end UST strength is contributing to the flattening. FedWatchers push up their forecasts.
Powell all but signaled a March hike a sure thing. The curve pancaked lower while equities quickly gave up post-FOMC gains.
Today’s hawkish interpretation of the FOMC decision and Powell comments knocked BEs out of initial flight as the risk tone soured.
Gamma plunged with the passage of the FOMC event along with the certainty of a March rate hike. Citigroup favors buying gamma on a dip.
Both equities and UST yields are nudging a little higher today as markets await their marching orders from the Fed. BofA previews FOMC decision.
Stocks are in the green but off morning highs ahead of key earnings reports and the FOMC. Banks preview the Fed. Another $800m in Formosas emerge.
BEs largely tracked the broader risk tone once again intraday, but ended mostly in the black despite a still shaky risk backdrop.
A less decisive equity rebound was enough to turn the tide for UST yields, which ended up marginally higher despite a very strong 5y auction result.