MATT VARNER'S  FIXED INCOME REVIEW

June 13, 2018

U.S. Treasury Yield Comparison


Source: U.S. Department of Treasury  

Market Recap

The chart above lists yields for U.S. Treasury securities as of last week and yesterday.  The yield curve as measured by the difference between the two-year maturity yield and the ten-year maturity yield flattened on the week to 0.42%.
 

On June 1, the employment report came in better than expected with 223,000 nonfarm payroll jobs added in May. The unemployment rate fell to an 18 year low of 3.8%. 

The Federal Open Market Committee (FOMC) is schedule to complete its two-day meeting today. The policy statement and forecasts are released at 1:00 PM CT. Chairman Powell will begin his news conference at 1:30 PM CT. It is expected that the FOMC will raise the federal funds rate to a range of 1.75% to 2.0%. The committee previous raised it by 0.25% in March. Market participants will be looking for any additional information on the speed future rate hikes may be implemented. 

The European Central Bank (ECB) has its policy meeting on Thursday. Market participants are looking for a potential announcement regarding the winding down of the ECB’s bond purchase program. The program continues to purchase 30 billion euro a month in bonds. The ECB is expected to not increase any of their short term rates until after the bond purchase program has ended. The refinancing rate remains at 0.0% and the overnight deposit rate is a negative 0.4%. 

Friday is quadruple witching. Quadruple witching occurs on the third Friday of the month in March, June, September and December. On this day stock index futures, stock index options, stock options and single stock futures expire. Higher volume in the markets typically can be observed approaching quadruple witching. 

After today’s meeting, the next FOMC meeting is scheduled for July 31st  and August 1st.
 


Sources: bankrate.com, bloomberg.com, Dow Jones News, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, individual company web sites and press releases.

Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice.  The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness.  References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service.  Past performance is not a guarantee of future results.

 

 

 

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