US TSYS/SUPPLY: Preview 20Y Auction
May-21 16:02
Tsy futures remain weaker ahead of the $16B 20Y bond auction (912810UL0) at 1300ET, WI is currently at 5.035%, 22.5bp cheap to last month's stop. Today's results will be available shortly after the competitive auctions closes at 1300ET.
- April auction recap: the $13B 20Y Bond auction re-open (912810UJ5) traded 0.4bp through, with a high yield of 4.810% vs a 4.814% When-Issued yield at cutoff. This was a smaller trade-through than prior (1.4bp in March), but was the 3rd in the last 4 auctions.
- As with the trade-through, the main peripheral statistics were weaker than March's but overall largely in line with the past 5-auction average: bid-cover of 2.63x (5-auction average 2.56x) and primary dealer takedown 17.0% (15.5% avg).
- Indirects took a relatively high 70.7% (66.6% avg), the highest in 8 auctions and a potential signal of foreign demand for the Bond - with directs taking a lesser 12.3% (18.0% avg).
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US TSY FUTURES: BLCK: Jun'25 5Y Buy
Apr-21 16:01
- +6,500 FVM5 108-16.25, buy through 108-15.75 post time offer at 1148:59ET, DV01 $267,000. The 5Y contract trades 108-15.75 last (+2.5)
PIPELINE: Corporate Bond Update: $5B Amex 4Pt Launched
Apr-21 15:57
Amex dropped the 6NC5 SOFR leg:
- Date $MM Issuer (Priced *, Launch #)
- 04/21 $5B #American Express $1.6B 4NC3 +98, $400M 4NC3 SOFR+126, $1.5B 6NC5 +108, $1.5B 11NC10 +128
- 04/21 $700M Excelerate Energy 5NC2
- 04/21 $2B QXO Inc. 7NC3 investor calls
FED: Citi: 125bp Cuts This Year, But Next One Pushed Back From May To June
Apr-21 15:42
Citi has pushed back its expectation for the next Fed rate cut to June, from May previously, as Fed officials "have guided against a May cut" amid government policy uncertainty.
- They still expect 125bp of cuts this year, however, which is more than the just-under-100bp currently priced by Fed funds futures. Citi: "we expect a range of data to have pushed Fed officials more dovish by June. That would include weaker "soft" data (including PMI this week) and signs that the labor market is loosening with the unemployment rate rising in the next few jobs reports."
- Citi shifted its 2025 view to 125bp of cuts immediately after the April 2 tariff announcements, from 75bp - in both cases they had seen the next cut in May.
- They note "risks are skewed to faster and/or deeper rate cuts" given that getting rates to around 3%, while close to where the FOMC sees longer-run neutral, is not "appropriately stimulative should financial conditions continue to tighten and the economy move closer to recession".
- MNI is not aware of any analysts still expecting a cut at the May FOMC at this stage (decision announced May 7), with futures-implied pricing of a 25bp reduction at around 15%.
