The US Treasury sold $25 billion of one-year T-bills at an interest rate of 33 bps yesterday, the highest since June 2010. It appears the short-end of the yield curve is increasingly pricing in ‘liftoff' sooner rather than later (and the long-end is responding by rallying – lower in yield – as medium term growth expectations fade) but it raises significant questions about the economic trajectory after the hike (and the ebbing confidence in The Fed).

This makes sense, given the majority now forecast a rate hike in September…

Which raises the question – if everyone expects rates to go up 25 bps in September and 1Y bills are at 33 bps… is it one-and-done for The Fed as the market is pricing a return to economic weakness?

Charts: Bloomberg