Slow start to the week
April 28, 2025
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–Treasuries ended the week at the highs, with cash 10s down 3.7 bps on Friday to 4.266%. From Feb 25 to March 27, TYM5 settlements were between 110-135 and 111-105. Then we had early April turbulence, and since April 14 the settlement range has been 110-245 to Friday’s high 111-165. Outside of tariff announcements the treasury market has been stable with a bias toward lower yields.
–The most inverted one-yr SOFR calendar is June’25/June’26 at -95.5. The lowest contract (SFRM5) to the peak contract (SFRU5) is nearly the same at -99 (9588.5/9687.5). New recent lows posted in SFRU5/U6 at -61.5 (9626/9687.5) and SFRZ5/Z6 at -31.5 (9654/9685.5). The Fed is showing little enthusiasm for near term easing while peak contracts (a year from now) tend to target the 3% area.
–It’s a big week for economic releases in front of next Wednesday’s FOMC. Dallas Fed Mfg today. JOLTS Tuesday. Wednesday should be interesting with Q1 GDP, ECI and PCE prices. Payrolls on Friday. Rarely does the Fed deviate from market pricing in front of a meeting, and FF contracts are pretty much locked down for no change. FFK5 settled 9569.5 vs current EFFR of 4.33% or 9567.0. However, if data prints weak, there’s still a chance for a last minute pivot.
