At Any Rate US Rates - Keep the liquidity flowing
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Dec 18, 2025 Phoebe White, Head of U.S. Inflation Strategy at J.P. Morgan, and Ipek Ozil, Head of U.S. Interest Rate Derivatives Strategy, dive into crucial topics surrounding U.S. economic dynamics. They discuss the impact of delayed economic data on market sentiment and explain the intricacies of the Fed's Reserve Management Purchases. Phoebe clarifies how these purchases affect Treasury issuance, while Ipek touches on the implications for swap spreads and funding markets. Their insights shed light on potential liquidity shifts in 2026!
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Front End Moves From Policy And Delayed Data
- Treasury yields moved lower after a Fed cut, RMP announcement, and delayed data release.
- Markets push the next full cut out to June 2026, keeping front-end yields sensitive to policy news.
Three Drivers Behind Two-Year Rally
- Front-end two-year yields fell ~15 bps, steepening the twos-fives curve.
- Phoebe White links the move to messy shutdown-distorted data, Fed chair odds shifting, and the Fed's RMPs statement.
Shutdown Distorts Labor And Inflation Data
- November payrolls and CPI were distorted by the government shutdown and late price collection.
- Phoebe White warns these distortions likely understate true labor slack and inflation momentum.