Bond Market Update

Inflation Expectations Support Monday Advance

• U.S. Treasuries trade on their highs after a slow rise past their opening levels. Shorter tenors outperformed from the cash start, and they were at the forefront of the recent push to highs, which eventually also lifted the long bond into positive territory. The advance has unfolded in steady fashion with the long bond bouncing after its yield hit a high of 4.991%, just shy of last week's high of 5.002%. The advance has been assisted by the release of the New York Fed's May Survey of Consumer Expectations, which showed a drop in year-ahead inflation expectations to 3.2% from 3.6% in April. The three-year outlook decreased to 3.0% from 3.2% while the five-year outlook dipped to 2.6% from 2.7%.
• Yield Check:
  • 2-yr: -4 bps to 4.00%
  • 3-yr: -5 bps to 3.98%
  • 5-yr: -4 bps to 4.08%
  • 10-yr: -3 bps to 4.48%
  • 30-yr: -1 bp to 4.95%