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Reports on US consumer and producer prices, showed more deceleration that economists had estimated. As a result, the outlook for Fed policy shifted from two quarter-point hikes by mid-2027 to include the possibility of just one hike.
In testimony Tuesday, Warsh avoided answering questions about the near-term path of interest rates, further supporting the market's wait-and-see stance.
While the biggest amount of unwinds occurred on March 2, the new positions added since then have broadly signaled short positions, targeting higher Treasury yields.
Futures spreads linked to the Secured Overnight Financing Rate, which closely track expected Fed policy, are becoming deeply inverted — a sign that traders are starting to price a more prolonged central bank easing cycle.
The positions in 10-year options could move closer to being in the money by the end of this week, with an array of labor-market releases ahead, culminating in Friday's government employment figures for December.
In SOFR options, which closely track the Fed's policy path, a number of large positions have emerged that look to benefit from an outsized cut of 50 basis points at next week's meeting.
Issuers and investors favor term SOFR for ABS floaters but regulators worry that expanding its use—even just a little—will undermine the new floating-rate benchmark.
The car maker is refinancing three revolving credit facilities using the Secured Overnight Financing Rate, and embedding climate-change goals into the deals.
Federal Reserve Vice Chair Randal Quarles has made it clear that banks failing to make the transition away from the benchmark rate could face supervisory consequences.
The modifiable templates are a follow-up to a similar notification the organization created in 2019 for lender use.
Starting Thursday, firms should stop issuing new loans, bonds and securitizations tied to the discredited benchmark, according to the Bank of England.
The heads of the Federal Reserve and Treasury are urging passage of legislation that would replace Libor with the Secured Overnight Financing Rate in certain contracts. That would spare banks litigation over trillions of dollars of contracts when Libor expires in 2023.
The act, yet to be signed by Gov. Cuomo, aims to resolve the difficult problem of how to fairly compensate floating-rate investors in instruments for which the London interbank offered rate is no longer published.
A PIMCO-sponsored HELOC securitzation, as well as a mortgage-insurance linked transaction, are the latest examples of issuers getting a head start on switching to an expected replacement benchmark for Libor.
Lenders also increased jumbo product availability as well as rolling out new SOFR-indexed ARMs.
The statement comes after multiple small and midsize institutions earlier this year warned the agencies that the secured overnight financing rate was ill-suited to them.
Four tranches of AAA-rated notes in the $342.2 million JPMorgan Mortgage Trust 2020-8 may utilize a term-SOFR rate should the benchmark improve on the weighted-average coupon of the deal.
While using the 30-day SOFR as its index, Freddie Mac structured the deal so it could shift to a one-month term if and when that rate is approved.
A New York-state proposal to shift trillions of dollars in securities contracts from Libor- to SOFR-based benchmarks is gathering dust. That worries bankers and investors on on how to proceed with the next steps toward a replacement rate as Libor's post-2021 expiration grows nearer.
The restrictions on the pooling of loans with any interest term based on Libor will be effective for traditional mortgage-backed securities issued starting Jan. 21, 2021, and earlier for reverse-mortgage securitizations.
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