Fed’s Roll-Off to Boost Sub-5Y UST Supply, Flattening 5s30s: TD
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Priya Misra (TD Securities USA LLC)
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UUID: 7947283
(Bloomberg) -- The Treasury should increase the supply of sub-5Y USTs to minimize funding costs of the Fed’s portfolio run-off, flattening the 5s30s curve, as yields in the sector rise, TD strategists led by Priya Misra write in note.
- Supply pressure could “steepen the 2s5s curve but flatten the 5s30s curve” as Treasury finances $175b of Fed’s portfolio run- off
- “We continue to hold on to our 5s30s flatteners”
- Additional Treasury supply to “cheapen” USTs vs OIS and “put tightening pressure on swap spreads”; front-end supply would lead GC and front-end USTs to “underperform” vs OIS and Libor
- TD doesn’t see any change in issuance sizes this quarter
- August quarterly refunding announcement could include $24b in 3s, $23b in 10s, $15b in 30s; discussion “will effectively set the stage for supply increases starting at the November refunding”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Priya Misra (TD Securities USA LLC)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283