Rates Trade in 30bp Range in Another Volatile Session

10-year Treasury yield trades as high as 3.50%, as low as 3.19% in volatile day. Surprise rate hakes by several European central banks sent rates careening higher to start the day, only for the move to be reversed during the U.S. session. Swap rates and Treasury yields have moved by 10, 20, 12, and 20 basis points over the last four sessions in a remarkable string of volatile days. The MOVE index (a measure of interest rate volatility) ticked higher to 138, one of the highest levels the index has been at since the pandemic.

European central bank join Fed with jumbo rate hikes. Earlier today, the Swiss National Bank and the National Bank of Hungary each hiked rates by 50 bps (SNB’s first hike since 2007), with SNB Chairman Thomas Jordan commenting, “The new inflation forecast shows that further increases in the policy rate may be necessary in the foreseeable future.” The Bank of England carried out its 5th rate hike since December, raising rates by 25 bps. Markets expect the European Central Bank to follow suite, with the bank calling an emergency meeting to raise rates in July and September.

Day ahead. Tomorrow will see Fed Chair Jerome Powell make his first public comments since Wednesday’s FOMC rate announcement.We’ll also get the latest industrial production figures for the month of May, currently forecasted to decline modestly from April’s figures.