Bond Market Update

Gains Extended

• U.S. Treasuries trade on their highs after adding to their opening gains. The market followed its higher start with a brief pullback attempt during the initial hour of trade, but Treasuries bounced quickly, rising to fresh highs in recent action. The push comes alongside a poor open in equities, which has the Russell 2000 (-2.4%) leading the Nasdaq (-2.0%) and S&P 500 (-1.9%) to the downside. The recent strength in Treasuries reflects growing rate cut hopes with the fed funds futures market now pricing in an 88.3% implied likelihood of a rate cut in June, up from 80.2% yesterday. Meanwhile, the implied likelihood of a rate cut in May is now at 47.4%, up from 38.2% yesterday and 25.8% a week ago.
• Yield Check:
  • 2-yr: -13 bps to 3.85%
  • 3-yr: -12 bps to 3.84%
  • 5-yr: -10 bps to 3.89%
  • 10-yr: -7 bps to 4.11%
  • 30-yr: -2 bps to 4.44%