Bond Market Update

Facing a test

• The Treasury market has faced another test today with the 10-yr note yield challenging the 4.50% level again and the 30-yr bond yield challenging 5.00%. Earlier, the 10-yr yield got to 4.52% bfore buying support came in; meanwhile, the 30-yr got to 5.00% where it quickly found support.
• The early tests coincided with a Punchbowl News report that President Trump told House Republicans to lay off Medicaid. The president wants the Medicaid focus instead to be on waste, fraud, and abuse in the system, not on actual Medicaid cuts. Such an approach, whereby there is a reduction in the Medicaid cuts that have been proposed in the reconciliation bill, would increase the cost of the bill and the projected budget deficit if offsetting spending cuts aren't found elsewhere.
• Yield check:
  • 2-yr: unch at 3.98%
  • 3-yr: unch at 3.96%
  • 5-yr: unch at 4.08%
  • 10-yr: +3 bps to 4.50%
  • 30-yr: +3 bps to 4.97%