Bonds prices fell this morning before a record $42 billion sale of 10-year Treasuries, with investors also awaiting a handful of Federal Reserve speakers for clues on the interest-rate path. US policymakers have left interest rates unchanged since July and have signaled the central bank’s next move is likely a cut. Several officials, including Chair Jerome Powell, have indicated they’re not in a rush to do so thus shifting market expectations for the timing of the first interest-rate cut toward May or June. Fed Fund futures now indicate only a 25% chance of a March cut whereas recently that figure has been as high as 70%.
CD issuance has been consistent with a wide range of market participants entering, focused primarily on short-term maturities. A lack of market depth at longer durations have provided attainable funding levels with more intrinsic value than hanging on the front end of the curve as indicated with today’s opportunities.