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Bond Market Insights - Wed, 03 Apr 2024

DJIA -1.0% / S&P -0.7% / CCMP -1.0% / CRUDE +2.0% $85.4 / GOLD +1.3% $2,281 / VIX +7% $14.61.  Strong US Labour data further raise’s expectations for delayed rate-cuts. TLSA (-5%/-20% ytd) see’s Q1 deliveries -9%, most in 4yrs, with increased competition, slowing demand, still trading at 50 p/e. Bank of China (3988 HK) says nett Interest margins to face further pressure due to on-going property sector risks.

The US Treasury Q2 sell-off continued in New York, a buoyant oil market and more US corporate supply were cited as catalysts. Week to date US IG supply is $18.8bn, with $10.5b being printed by 4 issuers overnight. 10yr yields climbed above 4.40% for the first time since late November. JOLTs job openings helped stem this tide, printing 8.756m vs 8.730m estimates. The quit rate was unchanged at 2.2% while the ratio of job openings/job seekers dipped below 1.4x. On the curve 2s10s approached the post-March FOMC highs at -32bps before retracing to -34bps in the afternoon

In FedSpeak Loretta Mester revised her 2024 growth forecast higher and sees the long range neutral rate nearer 3% than 2.5%, where she sat at the prior meeting, the risks of easing too soon are greater than risk of holding higher for longer. She left her 2024 DOT at 3 cuts but acknowledged it’s a ‘close call’. Mary Daly also held onto the three 2024 rate cuts, saying they remain a ‘reasonable baseline’, but there is more work to do before confident time to cut rates; no urgency to cut rates with econ and policy in a ‘good place’. They seem to be boiling frogs.

Tonight is Fed Chair Powell’s turn to speak, while Bowman, Goolsbee, Barr and Kugler add their voices to the chorus. Data wise ADP Employment takes centre stage ahead of non-farm payroll.



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