Treasury Update

September 30th, 2014 1:19 pm | by John Jansen |

The Treasury market is a hotbed of rather pedestrian activity today as clients close their books on Q3.

The yield curve has manifested a proclivity to steepen with 5s 3s at 142.4 a basis point wider than very early New York AM levels.The 10s 30s curve had flattened between 530AM and 830AM and the subsequent resteepening leaves it a little shy of the 530AM level.Dealers report an average volume day.

I think there are several reasons for the curve steepening. The World Bank deal was a $4billion deal and the machinations associated with the pricing would remove 5 year paper from the street. I think that with the labor report later in the week winning flatteners are probably being prudently unwound. In addition the next dollop of supply from Jack Lew and his acolytes is long end paper and I think some of this is the beginning of that underwriting process.

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