US Treasuries extended losses after a core CPI print came in above economist consensus, reinforcing market expectations that the Federal Reserve will need to raise interest rates in 2027 to contain inflation. The selloff was broad-based across maturities, with longer-duration Treasuries underperforming as real rate expectations shifted higher.
For Armada's traditional repo desk, sustained Treasury price declines reduce the market value of collateral held against open repo positions, putting pressure on haircut adequacy and potentially triggering margin calls for counterparties. If rate hike expectations firm further, primary dealers may also reduce balance sheet capacity for repo intermediation, tightening market liquidity at a time when Armada is building its counterparty network among banks and asset managers.