Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Good News Becomes Bad News

Thursday, 2nd June, 2022

Daily Flows

  • It was a relatively normal day in activity yesterday, or at least the new normal we have been seeing under the negative funding gap environment.
  • Rates remain around the same levels as Tuesday, but are still highly open to negotiation for investors.
  • We saw steady bond flows yesterday as some relative value has returned to bond markets after steep rises in yield in the past couple of days.

Good News Becomes The New Bad News

  • Last night saw stronger than expected U.S. Job openings and manufacturing data.
  • This data would normally be perceived as very positive.
  • However, this reinforces the need for an aggressive Fed stance and places further upward pressure on rates.
  • The U.S. 10Yr touched 2.95% overnight.

Bank of Canada Hikes

  • Bank of Canada hiked interest rates by 50 basis points to 1.50% overnight.
  • The central bank highlighted that “the risk of elevated inflation becoming entrenched has risen”.

Lawrence Vosper, Nicholas Allan

Curve Team