Treasurys

Treasury market bulls and bears fought to a draw this week as conflicting private-sector data on the health of the US labor market left expectations for another Federal Reserve interest-rate cut in December in limbo.

Regulators hope changes to the supplementary leverage ratio will improve Treasury market function, but whether that happens depends in large part on how banks react and adapt.

The Federal Reserve's vice chair for supervision said changes to the supplemental leverage ratio are needed to bolster the Treasury market and ensure banks are not incentivized to take on excessive risks.

This might deeply disappoint Wall Street investors who've been counting on a windfall if Fannie and Freddie are set free.

Treasury yields rose the day after President-elect Donald Trump was picked. The short-term result: It's harder for commercial real estate lenders and borrowers to find common ground.

Investors are set to start the week scrambling to decide if President Joe Biden's decision to end his reelection campaign and endorse Vice President Kamala Harris increases or decreases Donald Trump's chances of regaining power. 

The U.S. 30-year yield reached the highest level in a month on Monday amid predictions that a Trump presidency would lead to higher inflation.

Regulators had their priorities backward when it came to overseeing SVB and allowed an obvious danger to go unmitigated.

Securities and Exchange Commission Chair Gary Gensler and Treasury Under Secretary for Domestic Finance Nellie Liang see urgency in shoring up liquidity in government debt markets during times of stress.

The London interbank offered rate will phase out in a matter of months, and lawmakers have to step in to prevent a legal fiasco. They need to make Secured Overnight Financing Rate the sole fallback benchmark.

The London interbank offered rate was a flawed benchmark, but it was nonetheless a centerpiece of finance for decades. Congress should ensure it doesn't replace one interest rate monoculture with another as Libor winds down.

Federal Reserve Chairman Jerome Powell said the market dislocations of the past year resulting from the pandemic had changed the impact that the supplementary leverage ratio was having on the largest banks. After temporarily easing the requirement, the central bank is considering longer-term reforms.

Federal Reserve Vice Chair of Supervision Randal Quarles suggested that the massive influx of reserves stemming from the central bank's COVID-19 response may lead to a recalibration of the supplementary leverage ratio.

The decision is seen as a setback for the banking industry, which had been pushing for an extension, and a win for Democrats, who have argued that a pandemic is no time for banks to be shedding capital.

The industry wants regulators to extend a temporary measure making it easier to satisfy the supplementary leverage ratio. But Democrats’ control of the White House and Congress has given a bigger platform to those who say banks have had enough relief.

Temporary policy responses have mitigated problems in the short-term funding markets related to the pandemic, but permanent fixes may be necessary in some areas, the agency said in a report.

Regulators said they will allow banks to deduct Treasury securities — a source of market volatility in the pandemic — from the net stable funding ratio on the same day they provided relief from auditing requirements.

The market was upended because the largest banks hold more liquid assets in Treasuries than at the Fed, limiting their ability to supply repo funding on short notice, according to a new analysis from the Bank for International Settlements.

The custody bank has deployed more than 300 bots and is using artificial intelligence throughout the organization.

The Federal Reserve said it will begin buying $60 billion of Treasury bills per month to improve its control over the benchmark interest rate it uses to guide monetary policy after turmoil rocked money markets in September.