Treasuries took Chair Powell’s comments in stride as they generally matched expectations for a 25 bp rate liftoff at the upcoming March 15-16 FOMC meeting. He also added balance sheet shrinkage will follow, and will mostly be through run-off. The Fed will be closely monitoring risks with uncertainties over the war in Ukraine and its impacts. The 2-year yield is still about 8 bps cheaper at 1.416%, while the 10-year is 3.7 bps higher at 1.767%. The curve has narrowed to about 35 bps amid the underperformance of the shorter dated maturities. Meanwhile, the rally in equity futures is fading with the major indexes now just modestly firmer.
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Stuart Cowell
Head Market Analyst
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