Beyond Markets The Week in Markets: A demand boost for Treasuries
Jun 30, 2025
Get ready for a whirlwind tour of market dynamics! As President Trump prepares to announce a new Fed Chair, expectations for dovish policies rise. A recent Supreme Court ruling limits nationwide injunctions, shifting executive power. The signed trade deal with China adds another layer to the economic landscape. In the treasury market, potential demand spikes with $5.5 trillion possibly up for grabs, along with new stablecoin regulations that could boost treasury interest. All this makes central bank treasury sales seem less daunting!
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S&P 500’s Bullish Momentum
- The S&P 500 has reached new all-time highs, with 55% of global markets following suit.
- Past similar corrections suggest potential for further gains, indicating ongoing market strength.
Inflation Stubborn Above Target
- Inflation as measured by the core personal consumption expenditure index rose 2.7% year-over-year in May.
- Inflation shows no signs of moving closer to the Fed's 2% target soon, reducing near-term prospects of rate cuts.
Leverage Ratio Changes Boost Treasuries
- Changes in the Enhanced Supplementary Leverage Ratio could free up $5.5 trillion for banks to invest in low-risk assets.
- About 80% of this liquidity, roughly $4.4 trillion, is expected to flow into the treasury market, boosting demand significantly.