Shaken by SVB, earnings and bills, and PCE releases.
Determine 1: Prime panel: 10yr-3m Treasury unfold (blue), 10yr-2yr unfold (tan), each in %; Center panel: 5-year Treasury-TIPS unfold (purple), 5-year unfold adjusted for liquidity and danger premia (purple); Backside panel: VIX (sky blue, left scale), EPU (black, proper scale). Supply: Treasury through FRED, KWW following D’amico, Kim and Wei (DKW), CBOE through FRED, policyuncertainty.com.
The 10yr-2yr rose, whereas the 10yr-3m stays deeply mired in unfavorable territory. Here is what the yield curve appears to be like like on Friday in comparison with pre-SVB and pre-Ukraine.
Supply: Treasury.
Previous to Ukraine, the yield curve signaled continued progress. Even earlier than the collapse of SVB, the yield curve had inverted over a big a part of the spectrum, and after SVB it has much more over the 2yr-6m portion.
The unfold between the Treasury and the 5-year TIPS has narrowed, though the premia are possible altering as properly, it is onerous to say what meaning. Danger as measured by the VIX has additionally declined, whereas uncertainty as measured by the Baker, Bloom & Davis “information” primarily based measure stays elevated.
I feel it is attention-grabbing that the 5 yr outdated TIPS fell. In truth, nearly all the decline within the nominal price is because of the decline in the actual price, which suggests a decline in financial exercise.
The leap in oil costs in response to the manufacturing reduce promised by OPEC+ is prone to change charges (subsequent article).
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