Mnuchin capital curb sets up dollar duration for SSAs
A call by US Treasury secretary Steven Mnuchin this week to lessen the capital burden on banks had a bigger effect on US rates than a well telegraphed Federal Reserve target rate rise, creating some breathing space in long end swap spreads. That could ease long dated public sector bond issuance, but with euro market offering enviable duration funding, there may not be a queue of borrowers ready to print, writes Craig McGlashan.
The proposed reform was part of a wider US Treasury document released on Monday about changes aimed at improving the US financial system. But it was the part on deregulating capital holdings that really moved the dollar market.
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