Bond Market Update

Pullback Deepens

• U.S. Treasuries have seen some recent selling, which has pressured most tenors into negative territory while the 2-yr note is looking to find some support on its flat line. Treasuries tried to rise from their starting levels during the initial hour of action, but that move was rebuffed even as oil continued retreating from its overnight high in the $95/bbl area. Furthermore, the recent selling took place even though the Federal Reserve Bank of New York's latest Survey of Consumer Expectations showed a slight dip in year-ahead inflation expectations (to 3.5% from 3.6%) while the three-year (3.1%) and five-year (3.0%) outlooks remained unchanged. Concerns about the strength of the labor market grew, as the mean perceived probability of finding a job to replace a potential loss of a current job fell to 43.7% from 45.9% in April, remaining below its 12-month trailing average of 46.8%. Equities have dipped from their mid-morning highs, fighting to remain above their opening levels.
• Yield Check:
  • 2-yr: UNCH at 4.16%
  • 3-yr: +1 bp to 4.22%
  • 5-yr: +1 bp to 4.29%
  • 10-yr: +2 bps to 4.56%
  • 30-yr: +3 bps to 5.03%