The bond market rebounds🧐

Bond markets reacted accordingly with US 10y yields retracing SVB-related losses, closing>4%, while 2yr yields closed gapped back>5% with all US rate cuts taken out until 2024.06 (terminal yields ~5.45%). UK 10y yields rebounded to above Liz Truss’ mini-budget highs, as BoE’s Bailey didn’t make much pushback against the market’s audacious pricing of a 6.5% (!) terminal rate in the UK base rate. Street dealers reported volumes at~180%of normal, with very heavy real money activity in shedding duration getting out of front-end longs. Furthermore, Dallas Fed’s Logan came out to state that a June rate hike would have been ‘entirely appropriate’, a more restrictive policy is needed for the Fed to reach 2%inflation goal, and she remains a skeptic on the supposed lagged effects of rate hikes.