Long bond looks iffy
May 2, 2023
–RBA unexpectedly raised rate by 25 to 3.85%. Janet Yellen warning the US will run out of money in June; maybe JPM can buy it.
–Light May Day volume. Long end of the treasury curve especially weak, though bonds have rebounded this morning, USM3 last at 130-06. The settlement was 129-21, but immediately slid to 129-02. USM3 technically appears to be putting in a top which would target around 124-16.
–5/30 ended at 19. Since the Fed started hiking (and remember, that was only 14 months ago) the range in 5/30 has been just over 32 in July 2022 to a low of -44 on March 7. The most recent high was 25.5 on March 23 amid the banking crisis, which really doesn’t fit the definition of a crisis because the FDIC is going to backstop any TBTF who wants to cherry-pick assets from smaller banks that were crushed by the inverted curve. Seems like the ratings agencies should be looking at downgrading the US.
–May FF settled 9495.75 in front of tomorrow’s FOMC; final settle should be just under 9494.5 on a 25 bp hike.
