Short end yields under pressure, long end eases
May 28, 2024
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–Friday featured new recent lows in some curve measures. For example, 2/10 hit a new low for the year of -48.5 (though low in December was -53.6). 5/30 hit a recent low of 4 bps, not quite at April’s low of 1.7. On the SOFR strip, SFRM5/M6 posted a new low -54.5, down 1.5 on the day. This spread had a high print of +0.5 this year (January).
–Today’s news includes Consumer Confidence, expected 95.9 from 97 last. Speakers Cook and Daly. Kashkari says the Fed can take its time cutting rates; the economy has remained “remarkably resilient”. Treasury auctions both 2 and 5 year notes, followed by 2y FRN and 7’s tomorrow.
Link below is a dynamic chart showing the relative movements of Federal spending on interest payments and defense.
