US TSYS: Rates Near Lows, Stocks Bounce Ahead Senate Budget Vote
Mar-14 19:29
- Treasuries look to finish near session lows amid cautious rise in risk sentiment as markets awaited Senate vote on GOP spending bill "H.R. 1968" to keep government open through September.
- Sentiment measured by UofM another matter altogether: notably lower than expected as it slid to 57.9 (cons 63.0) in the preliminary March release after 64.7 in February, for the lowest since Nov 2022. It came with a sharp climb in inflation expectations, with the 1Y surprisingly jumping to 4.9% (cons 4.3) after 4.3 and the 5-10Y jumping to 3.9% (cons 3.4) after 3.5% for a thirty-two year high.
- Jun'25 Tsy 10Y futures trade -11 at 110-19, above initial technical support at 110-12.5/110-00 (Low Mar 6 / High Feb 7). Tsy 10Y yield 4.3121% last, curves flattening late: 2s10s -1.813 at 28.876, 5s30s -3.010 at 52.774.
- Stocks bounced off yesterday's six-month lows after NY Senator Schumer (D) said he would not block the GOP spending bill in order to avoid an imminent government shutdown.
- Strong rally for the Euro, as headlines suggested Germany have found a solution to the debt brake passage. EURUSD rose from around 1.0850 to 1.0912 following the news, falling short of most recent cycle highs which reside at 1.0947.
- Fed remains in Blackout until after next Wednesday's FOMC policy annc. Monday data focus on Retail Sales, Empire Manufacturing and NAHB Housing Market Index measures.
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US: FED Reverse Repo Operation: New Multi-Year Low Usage
Feb-12 19:17
RRP usage falls to the lowest level since mid-April 2021 this afternoon: $67.670B vs. $76.446B on Tuesday. The number of counterparties falls to 27 from 36 prior.
GERMANY: Bundesbank Debt Brake Proposal Would Follow Up 2022 Paper
Feb-12 19:10
Bundesbank President Nagel said Wednesday the Bundesbank is set to publish a debt brake proposal after the German parliamentary elections on February 23, Bloomberg reports. All mainstream parties except the pro-business FDP have signaled at least some readiness for reforms following the vote.
- A qualified majority would be needed for Bundestag passage.
- While any actual adjustments will come down to the political process, the Bundesbank might try to provide some input for the ongoing debate on the topic, and indeed, it already had published a debt brake review proposal in April 2022 - some key excerpts from that below:
- A proposed change on the cyclical adjustment of the net issuance allowance would allow "more time to adjust in the event of revisions to expected economic developments and tax revenue forecast errors. This would make it easier to stabilise budgetary policy and avoid procyclical stimuli."
- Some additional adjustments would make sure that "in contrast to the increasingly flexible manner in which the debt brake is being used [it was suspended four consecutive years 2020-23], such reforms could reinforce its binding effect. Specifically, budgetary developments could be stabilised by recording interest expenditure on an accruals basis. In addition, credit balances on the control account resulting from not borrowing up to the borrowing limit could be netted against emergency loans."
PIPELINE: Corporate Issuance Roundup: $2.25B Bell Canada Launched
Feb-12 19:10
- Date $MM Issuer (Priced *, Launch #)
- 02/12 $2.25B #Bell Canada $1B 30.5NC5.5 6.875%, $1.25B 30.5NC10.5 7%
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