Treasury demand eases
–Treasuries lower this morning in front of the seven year auction. Yesterday’s 5-yr was soft, with bid to cover at only 2.28, lowest since Feb 2021. Yield was 3.271, tailing by 3.5 bps. While Durables were solid at 0.7%, the Dallas Fed Mfg number plunged to -17.7, lowest in six years outside of the covid plunge in 2020. Ten year yield ended up 7 bps on the day, to 3.194%.
–Today we get Conference Board Consumer Confidence, expected to drop to 100 from 106.4. That too, would be the lowest number since 2016 outside of the covid malaise. The ECB forum in Sintra is taking place, with Lagarde, Powell and Bailey comments expected tomorrow. Today Lagarde said, “We have markedly revised down our forecasts for growth for the next two years, but we are still expecting positive growth rates… “If the inflation outlook does not improve, we have sufficient information to move faster. This commitment is, however, data dependent.” If the sufficient info is lower growth and higher prices, how fast can the ECB backpedal?
