Bond Traders Weekly Outlook: Treasuries Play Defense Ahead of Flood of New Supply

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    Morning Bonds:

    U.S. Treasuries sit on their highs after rallying in reaction to the ISM Non-Manufacturing Index for May. Treasuries followed their lower start with a sideways drift through the first 90 minutes of action, but they jumped into the green after the recent batch of data included a weaker than expected Non-Manufacturing Index (actual 50.3%; consensus 52.3%). The Index remained in expansionary territory, but it missed expectations, just like Services PMI reports from Germany, France, Italy, and Spain.

    Equities trade near their flat lines with the S&P 500 up 0.1%.

    2-yr: -4 bps to 4.47%
    3-yr: -2 bps to 4.12%
    5-yr: -2 bps to 3.83%
    10-yr: -1 bp to 3.68%
    30-yr: UNCH at 3.88%


    U.S. Treasuries lower start, a continuation of yesterday’s selling. Treasury futures selling pressure after Chinese government officials spoke about the country’s economy but did not indicate that additional support will be offered to the property market, as had been speculated in recent days.
    Eurozone’s Q1 GDP was revised down to -0.1% from +0.1%, reflecting the first contraction since mid-2021.

    Crude oil is adding to yesterday’s gain while the U.S. Dollar Index is down 0.3% at 103.81.

    2-yr: +1 bp to 4.56%
    3-yr: +4 bps to 4.22%
    5-yr: +2 bps to 3.94%
    10-yr: +3 bps to 3.81%
    30-yr: +2 bps to 3.96%


    U.S. Treasuries on their lows ongside a higher start in equities with the Nasdaq (+0.9%) holding a sizable lead over the S&P 500 (+0.4%) thanks to renewed strength in technology names.

    The overnight news flow was limited, though it is worth noting that China’s PPI fell at its fastest pace since early 2016 in the May reading. In Europe, there has been continued rate hike chatter ahead of next week’s ECB meeting.

    2-yr: +7 bps to 4.59%
    3-yr: +7 bps to 4.24%
    5-yr: +7 bps to 3.93%
    10-yr: +5 bps to 3.77%
    30-yr: +3 bps to 3.92%


    U.S. Treasuries ended the week on the defensive with participants eyeing a flood of new supply in coming weeks and months as the Treasury works to rep
    [See the full post at: Bond Traders Weekly Outlook: Treasuries Play Defense Ahead of Flood of New Supply]

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