It is unwise to expect too much from the minutes of the Federal Open Market Committee (FOMC) meeting in June on Wednesday. In fact, the minutes are likely to be a killer of market volatility. Investors should pay more attention to the gradual downward trend of interest rates.
When the minutes of the FOMC meeting are released, it is counterintuitive to be bullish on government bonds, but that does not mean that interest rates will not subconsciously jump as a result of the minutes. However, any such reaction could eventually prove to be a buying opportunity.
After all, there will be no new medium-and long-term bond issuance until next week, short positions still exist, momentum at the far end of the curve is still improving and far from overbought. The market will not fluctuate as violently as it did on Tuesday, but the direction should continue-yields gradually move down the gap and the stock market rises.
On the yield curve, there are expected to be some residual curves to steepen the unwinding of positions, mainly in 5s/30s positions on the 120bp line.