Fixed Income Close
Extended buying into the long end continued this afternoon despite a bit of back-and-forth after the FED’s 25bp rate cut as markets tried to read the tea leaves on how neutral the FOMC will be going forward. The FED’s statement seems to indicate the rate-cutting cycle is at an end.
Beyond the FED’s proclamations, TSY said today that it expects increased issuance over the remainder of the fiscal year. It will commence issuing the 52-week bill every 4 weeks to reduce reliance on cash management bills.
Yields on the short end jumped higher after the decision, but then flipped and headed lower, with the 4wk bill yield down 10bps to 1.17%. The 3-month was down 6 to 1.4%, while the 6-month was 10bps lower at 1.63%.
Buying in longer-dated maturities steepened the curve just a bit today, with the 2yr yield sinking to 2.27% and the 10yr yield down to 3.738%. The 30yr added a handle to yield 4.483%.