News

⑴ The US General Collateral repo rate opened lower on Tuesday, falling by 6 basis points to 3.66%, dropping below the 10-day moving average of 3.67%. This was mainly impacted by a net withdrawal of $2.1 billion from Treasury settlements—the value of new bonds issued was lower than the matured debt, which effectively injected cash into the system and reversed the upward pressure on rates seen yesterday. ⑵ On Thursday, another $3 billion in cash will be injected into the system, combined with funds from government-supported enterprises, which is expected to push overnight rates toward the middle of the 3.50%-3.75% range. Today, intraday GC rates are estimated to fluctuate between 3.66% and 3.61%, while the overnight rate is likely to be near the lower edge of the range. ⑶ The 20-year bond's premium over GC widened by 14 basis points to 33 basis points, due to hedging demand for today’s auction, while the 2-year premium remained stable. Federal Funds futures pricing indicates a 99% probability that rates will remain unchanged at the June FOMC meeting. ⑷ In terms of short-term OIS, 0x3 tenor OIS is quoted at 3.643%, about 2.3 basis points higher than the 10-day average SOFR rate of 3.62%. This implies the market is pricing only about a 7% chance of a 25 basis point rate hike in the next 90 days, which broadly aligns with the steady expectations conveyed by Federal Fund futures. ⑸ SOFR futures showed mixed performance: white contracts fell 0.5 basis points, while red, green, and blue contracts rose by 2.5 to 3 basis points. This was linked to spot oil prices dropping about 2.9%. Going forward, attention will be on the actual overnight rate response range after Thursday's settlement funds are in place and whether the auction demand for 20-year bonds can sustain the current premium level.

Odaily reports that U.S. President Trump has stated he will further push down oil prices. (Golden Ten Data)

BlockBeats news, on June 16, Bitget CFD Chief Analyst Lewis Huang pointed out during an online livestream themed "Countdown to the Federal Reserve Decision" that the latest non-farm payrolls surged by 172,000, far exceeding expectations. Combined with both CPI (4.2%) and PPI (6.5%) rising, this demonstrates the resilience of the US labor market and intensifying inflationary pressures. This "strong employment + rising inflation" data combination has shattered the market's prior expectations of rate cuts and provides solid grounds for the Federal Reserve to maintain high rates, which is negative for high-valuation tech stocks such as those on the Nasdaq. Regarding the Federal Reserve's policy direction, Lewis Huang summarized this decision as Kevin Warsh's "perfect hawkish script". He noted that the market pricing logic is undergoing a fundamental shift, and previous expectations that an economic slowdown would force rate cuts are being overturned. Warsh is known for his tough stance against inflation, and the decision is expected to reveal an extreme "higher for longer" scenario. He reminded the market to pay close attention to the wording on structural inflation risks in the policy statement and the possibility of an upward adjustment to the long-term neutral rate in the dot plot. Discussing specific CFD trading strategies, Lewis Huang stated that if the market is still holding on to the old expectations of rate cuts, this will be an excellent opportunity to capture expectation gaps and position for short trades. Under Warsh's lead logic linking stocks, bonds, and currencies, US Treasury yields will find it hard to fall and easy to rise, which is negative for US Treasury CFD; the US Dollar Index (DXY) will get strong support, significantly increasing the win rate for long positions; and high-valuation stock indices will face a severe test from rising real interest rates, so CFD traders are advised to constantly be on the defensive with regards to the Nasdaq index.