Treasury Action: yields were whipsawed
Treasury Action: yields were whipsawed in sympathy with those of Bunds, which first shot higher on the defined QE taper through year-end then cessation, followed by the dovish outlook on low rates for as long as required. The Bund yield topped 0.51% before plunging to 0.465%, while the T-note yield jumped to 2.96% before easing under 2.94%. The Bund/T-note spread widened from -245 bp to -248 bp as a result of the Bund outperformance as markets attempt to calibrate the more hawkish Fed yesterday (and rate hike) against the dovish spin from the ECB, as the Draghi presser is awaited. The euro also provided a relative signal with a reversal from 1.1851 highs to 1.1716 lows. The U.S. yield curve is bull flattening now with the 2-year yield 2.5 bp lower and the bond yield 4.6 bp lower, flattening the 2s-30s spread another 2 bp to trade inside +50 bp. Fresh concerns about curve inversion and the recessionary implications were sparked in the wake of yesterday's Fed hike as well.