With QE2 set to roll off in June, the market is getting busy pricing out the Fed’s steady purchases day after day.
Basically, we are seeing the reverse of the bond buying that sent yields tumbling late last summer and through the fall in anticipation of QE2.
We’ve yet to see a major boost to the dollar yet, but I expect it to come before too long. Should the ECB hike only 25 bp at next week’s meeting, that might be the catalyst for the dollar to begin its recovery….
Remember, it was not much more than a week or two ago when most in the market expected QE3 to be a done deal…
US 2-year notes are nearing a 0.83% yield, up over 30 bp since the 0.50% low after the Japanese earthquake. 0- year notes are u9 6 bp on the day at 3.50%.
