Strong Auction Helps Halt Sell Off

Strong Treasury auction helps pull rates lower. For how long, who knows, but a strong auction of 20-year Treasury bonds helped pull rates back from YTD highs. Swap rates and Treasury yields pulled back 2-13 bps on the day, led lower by the long-end of the curve. The 10-year Treasury yield declined 10bps to 2.83%.

Fed Beige Book shows inflation and geopolitical events weighing on growth expectations. The central bank’s Beige Book is a survey of its regional banks and serves as a summary of sentiment and economic expectations. Inflation pressure continues to be widespread, with price increases seen across labor markets, raw materials, transportation and energy. Also crucial- producers are able to pass along prices to consumers given the strength of demand.

Day ahead. Tomorrow will be highlighted by a pair of speeches from Fed Chair Jerome Powell, who is making some of his final public comments before the Fed’s “quiet period”. As it stands, Fed Funds futures are pricing in two consecutive 50bp rate hikes over the next two FOMC meetings.