Rates Rise to Start CPI Week

Rates rise slightly in quiet session. Swap rates and Treasury yields opened the week slightly higher, with the 2-year and 10-year yields rising ~3bps each. The move came after wholesale inventories data in the morning and comments from Fed official John Williams, who argued that the extreme pace of rate hikes was not the cause of stress in the banking sector. Elsewhere, equities were mixed on the day, with the S&P 500 rising 0.10% and the NASDAQ Composite falling -0.03%

FHLB issuance declines in last week of March. The FHLB issued $37 billion in debt in the final week of March, a steep drop from the $304 billion issued two weeks prior. FHLB lending is still elevated, but the decline in advances and debt is viewed by some as an early sign that the banking crisis has started to cool, with member banks having less cash needs and less fear of deposit runs. Short-term issuance peaked at $153 billion in mid-March, declining to $17.6 billion in the final week. The FHLB system has also issued less bonds with durations generally over one year, declining from $151 billion the week after SVB failed to $19.8 billion in the final week of March.

Day ahead. Fed voters Patrick Harker and Neel Kashkari will make public comments late in the session. Business optimism data will be released at 6 AM ET before a 3-year note auction at 1 PM.