US 2y yields are around their highest levels seen since Fed Chair Yellen’s dovish speech as continued gains in equity and crude prices raises concerns that the Fed could deliver a more hawkish message.
While a further repricing of Fed expectations could extend a bit in the days ahead, USD gains are likely to trigger higher USDCNY fixings and potentially derail the oil price recovery, we suspect that feedback to the risk environment would prevent markets form pricing significant prospects for a June rate hike.
We added a long USDCAD on Wednesday*
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