Treasury yields are another 3-5 basis points lower this morning despite solid March PMI data out of Europe and a surprise 50 basis point rate hike from New Zealand’s central bank. The market turned yesterday morning following the release of February JOLTS report, which showed a 632,000 decline in job openings. The Treasury curve bull steepened, with the 6-month yield down 60 basis points, on the perception of more fuel for a Fed pivot. This morning’s ADP employment report, a typically unreliable predictor of nonfarm payrolls, showed less job growth than expected in March. A Bloomberg article released late yesterday highlights the recent activity in SOFR and other short-term rate options, where traders have been closing out positions at a rapid pace amid heightened uncertainty about the Fed’s upcoming moves. The result has been a decline in implied rate volatility, which had set fresh post-GFC highs in the immediate aftermath of the recent bank failures. Lastly, the MBA mortgage activity index fell 4.1% last week, including a 5.4% decline in refi applications and a 3.5% decline in purchase applications. According to the MBA survey, the average 30-year conventional fixed mortgage rate fell 5 basis points to 6.40%, down 40 basis points from early March levels.
Jason Haley
Chief Investment Officer
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