At Any Rate
US Rates: Trick or treat: recapping the November refunding announcement
Oct 31, 2024
Afonso Borges, a seasoned U.S. rate strategist at J.P. Morgan, joins to dissect the latest Treasury refunding announcement. The discussion highlights the stability of coupon sizes and the growing significance of TIPS auctions. They delve into the introduction of a shorter-term TIPS benchmark and explore how the Treasury is navigating fiscal projections and strategic management. Additionally, the conversation touches on near-term risks in the rates market, evaluating impacts from employment reports and unforeseen events.
11:35
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Quick takeaways
- U.S. Treasury yields are at their highest since last summer, influenced by strong economic data and market sentiment shifts.
- The November refunding announcement reflects stable Treasury borrowing practices and potential future discussions on a three-year TIPS.
Deep dives
Current U.S. Treasury Yield Dynamics
U.S. Treasury yields are currently near their highest levels since last summer, driven by stronger-than-expected domestic economic data that highlights the resilience of the U.S. economy. This situation suggests that the Federal Reserve may not need to implement as deep of an easing as previously thought. The Treasury curve has seen bearish flattening, indicating a shift in market sentiment. Additionally, rising yields have been observed across developed markets, with notable movements in the euro area and the U.K.
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