Jun. 24 at 8:00 PM
Historically, the yield on the 10-year US Treasury bond tends to hover around +1.75 ppts above the CPI.
As of May 2025, the US CPI rose to 2.4% y/y from 2.3% in April
Implying +4.15% vs current 4.28%
Ongoing growing supply from the US Federal Debt & weakening foreign demand has kept yields/premiums elevated. However, intermediary demand should mitigate for foreign demand erosion if the eSLR is dropped from 5% to 3.5%
Fed Reserve Chair Powell said that potential changes to a key capital buffer should bolster banks’ roles as intermediaries in the US Treasuries market.
“When the leverage ratio is binding, it discourages banks from undertaking low-margin, fairly safe activities such as mediation in the Treasury markets. This should encourage more mediation”
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