WHITE HOUSE: Biden And Harris Delivering Remarks To Open Summit Of Americas
President Joe Biden and Vice President Kamala Harris are shortly due to deliver remarks at the Inaugural Ceremony of the Summit of the Americas in Los Angeles.
- Livestream: https://www.youtube.com/watch?v=3KTkf7d_2kA
- Harris is due to speak first at 20:00 ET 01:00 BST with Biden to follow at 20:15 01:15 BST.
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US TSYS: J.P.Morgan Adjust Yield Forecasts
Late Monday saw J.P.Morgan note that “last week, our colleagues in economics revised their Fed forecast: they now project 50bp hikes at the next 2 FOMC meetings in June and July, before stepping down to a pace of 25bp hikes, leaving the Fed funds target back in the 3.00-3.25% range by March 2023. We refrained from making forecast changes at the time, as the volatility post-FOMC indicated that technicals were at work just as much as fundamentals. Volatility has not subsided at all, but we make adjustments to our forecast to reflect a Fed that will raise rates more quickly and to a higher terminal rate than in our prior forecast. We raise our 2-Year forecast by 25bp to 3.15% by year-end, and revise our 10-year target 35bp higher to 3.20%. While the moves are somewhat large relative to changes in our Fed forecast, it also incorporates expectations that the market will price in the Fed’s terminal rate months prior to our final projected hike early in 2023.”
AUSSIE BONDS: AUCTION PREVIEW: Feb-50 I/L Supply Due
The Australian Office of Financial Management (AOFM) will today sell A$100mn of the 1.00% 21 February 2050 I/L Bond, issue #CAIN415. The line was last sold on 11 May 2021 for A$100mn. The sale drew an average yield of 0.3107%, at a high yield of 0.3225% and was covered 3.6000x. There were 36 bidders, 10 of which were successful and 8 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 70.0%.
- The market expects RBA normalisation to move at a swift pace after last week’s larger than expected cash rate lift off, although market pricing is more aggressive than the assumption on which the RBA has conditioned its economic forecasts.
- 10+-Year BEIs have struggled to gain any meaningful traction above 2.50% as a result i.e. the metrics have struggled to move into the upper half of the RBA’s 2-3% target range, even as inflation surges.
- Still, the well-documented inflation worry that is evident at present should result in the smooth passage of today’s supply.
- Results due at 0200BST/1100AEST.
JGBS: VIX Back From April Peak After BoJ Affirms Dovish Credentials
The S&P-JPX JGB VIX Index has pulled back from the levels seen in late April, with the BoJ’s re-affirmation of its dovish stance and support for its current YCC parameters (including a pledge to conduct fixed rate operations on every business day) compressing vol. Note that the April spike higher in the metric didn’t pierce March’s YtD high (which came as the Bank was drawn into action after the top end of its permitted -/+0.25% 10-Year JGB yield trading band was breached).
Fig. 1: S&P-JPX JGB VIX Index
Source: MNI - Market News/Bloomberg
