FRB Rate Decision This Week

After seeing massive US Treasury cash buying for month end last Friday, today we are seeing a reversal of that, as both 10Y and 30Y basis getting taken to the woodshed:

The 10Y is the weakest performer today on the curve as it is +11.8bp, this seems all cash related as the futures curves are a bit steeper today as the Ten Year Futures vs the Bond Future or the NOB is +9 ticks on the day, so definitely the weakness is in the cash sector.

This should not be a surprise as next week we see the US Treasury will auction, $96 Billion next week of 3s,10s and 30s for settlement on May 15th. We have a lot of data this week as well from JOLTS, to ISM, NonFarm payrolls and of course the FOMC (FRB) and ECB decisions.

The FRB and the ECB are widely expected to raise 25bp each, 5.25% and 3.25% respectively, but the bigger deal is always the news conference. Perhaps some of these Journalists can ask legitimate questions, like, why doesn’t the FRB reduce its balance sheet as opposed to raising rates? We would surely like to know!