- In the US, rates sold off slightly after nonfarm payrolls declined less than expected and the Fed signaled that it could pause after easing 25bp last week. However, signs of economic weakness remain as the Case-Shiller 20 City Home Price Index showed a very large decline of 12.7% from a year ago in March and April auto sales reached the lowest level in nearly a decade.
- The Fed showed a preference for liquidity measures by increasing the TAF to $150bn per month (from $100bn) and a combined $62bn per month (from $36bn) in currency swaps with the ECB and SNB. Although the FOMC will likely pause in June to allow the TAF, past easing and the stimulus package time to work, market thinks that economic weakness will force them to ease further. This suggests a buying opportunity for rates, although market remains cautious before the GSE earning releases.
In the US, rates sold off slightly after nonfarm payrolls report
May 4th, 2008 · No Comments
Tags: Fixed Income Strategy
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