US TSY FUTURES: Cover Dominated On Wednesday
OI data points to a mix of net long cover (TU), short cover (FV, TY & USY) and long setting (US & WN) during Wednesday’s twist flattening of the curve.
- The curve-wide positioning bias was tilted comfortably towards cover of existing positions, with the short cover in the belly/intermediates most prominent.
| 07-May-25 | 06-May-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,085,950 | 4,097,367 | -11,417 | -418,270 |
FV | 6,872,658 | 6,912,252 | -39,594 | -1,695,768 |
TY | 4,933,604 | 4,956,188 | -22,584 | -1,456,211 |
UXY | 2,284,600 | 2,291,350 | -6,750 | -594,829 |
US | 1,799,369 | 1,794,267 | +5,102 | +648,472 |
WN | 1,888,661 | 1,888,335 | +326 | +59,900 |
|
| Total | -74,917 | -3,456,707 |
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NORGES BANK: Fairly Balanced Commentary From Governor Bache
Norges Bank Governor Bache's speech at the Finance Norway conference here. Overall, no explicit hints that the March MPR rate path is out of date following the US tariff announcements. Although Bache emphasises the importance of employment in delivering Norges Bank's mandate, attention to higher-than-expected inflation pressures remains clear.
- "As always, Norges Bank is prepared and is closely monitoring market developments".
- Re-iterates risk assessment from March monetary policy statement: "If the policy rate is lowered prematurely, we risk seeing a continued rapid rise in prices. At the same time, we do not want to restrict the economy more than needed to bring inflation back to target".
- "If prospects suggest that economic activity weakens amid a pickup in inflation, monetary policy trade-offs may be more difficult. We must then strike a balance between bringing inflation back to the 2 percent target and keeping employment as high as possible".
- "Our interpretation of Norges Bank’s mandate is that considerable weight shall be given to employment – also at times when inflation deviates significantly from the target. Keeping employment as high as possible is also important when faced with a global trade conflict".
- "But we must respond by tightening monetary policy if there are prospects that inflation will become high".
