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2026-02-18 20:57:00
[Swap Market Opens Mixed, Position Adjustments Dominate Trading Ahead of FOMC Minutes] ⑴ On Wednesday, the US dollar swap market opened mixed, with the yield curve steepening slightly. Swap buying was relatively mild, pressured by a rebound in US Treasury yields. Tuesday's $1.328 billion investment-grade corporate bond issuance in the primary market was successfully absorbed, but rising money market rates and a decline in SOFR futures provided weak buying for swaps. ⑵ Overnight trading was mainly driven by position adjustments, with the market awaiting key risk events today—the Fed's January meeting minutes and a series of economic data. Previously, the Reserve Bank of New Zealand kept interest rates unchanged and hinted at a prolonged period of inactivity, leading to a slight sell-off in Asia-Pacific bonds and a slight rise in Japanese bond yields. The UK's January CPI fell to a near one-year low, but was in line with expectations, having a short-lived impact on the bond market. ⑶ US Treasury yields rose across the board, with the curve initially flattening before flattening again. The 10-year yield rose to 4.067%, and the 2-year yield rose to 3.449%. European and UK bonds followed US bonds and rose slightly. Reports of Lagarde's potential early resignation had a limited impact on the euro, but did put slight pressure on it. Japan announced a $550 billion investment plan in the US, weakening the yen. In other markets, European stocks were boosted by strong earnings reports, while US stock futures rose due to easing AI concerns. The US dollar index edged up to 97.254, Brent crude rose 1.98% to $68.74, and gold rose 0.8% to $4915.90, awaiting the Fed minutes and subsequent GDP and PCE data.
