US Bond Market Updates..
US Treasuries and USD
“Custody holdings are falling at the Fed and, while the impact is not so clear for the USD, it’s negative treasuries….the securities held in custody for foreign official and international accounts, which foreign central banks make up a large share of the deposits….
There exists a 40% correlation between Foreign EM central bank reserve accumulation and official demand for UST….Falling reserve growth and intervention explains a large share of the selling. While the movements are not what we would term ‘highly’ correlated, they are not zero either. What this means is Central banks are placing a premium on USD cash in hand over the paper in US.” Taken from Citibank Strategy
Near term support to be found in the FOMC on 30-31 Jul and the possibility of a dovish outcome which could support fixed income prices for the time being.
“Yesterday, the $ was hit as…
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