Give Me Fives

Give Me Fives

March's rosy jobs report was met with bear flattening Friday, as markets looked to reprice the Fed. Most notably, five-year yields rose more than 7bps at one juncture, hitting 0.979%. That's the highest since February of last year, and appeared to suggest (again) that folks are keen to pull forward Fed hikes. "A 2022 rate hike is more likely than a 2024 first move," ING's James Knightley remarked, adding that "there is no reason to believe that 'substantial further progress' can’t be reached
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5 thoughts on “Give Me Fives

  1. Well, if they do taper before hiking (as opposed to doing both at once), they’ll have learned something from 2018. I always thought it was impressive for so many smart people to do such a stupid thing as hiking and tapering, both at once…

  2. Priya is right. Mkt prices in risk premium of rate hikes that are unlikely to materialize and this risk premium can be monetized with long 5s. In harkens back to post – GFC when you could roll down the forwards for years before the Fed got serious about hiking rates at the end of 2016

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