The yield on 10-year Treasury bonds fell 4.6 basis points from Tuesday's close to 3.393%, their lowest since April 7. The 30-year bond's yield declined 4.3 bps to 3.689%. while the two-year's yield dipped 2.6 bps to 3.953%. The demand for longer-dated paper on Wednesday comes as the yield on two-month bills jumped 30 bps to 5.257% on rising concerns that the government could hit its debt limit by June 1. The one-month bill's yield climbed 5.6 bps to 4.449%, its highest since April 10. The three-month's yield remained flat from Tuesday at 5.222%. The market is positioning itself ahead of expected remarks from Powell at the conclusion of this month's FOMC meeting. Investors anticipate Powell will signal an eventual softening of monetary policy after over a year of rate hikes, in light of the failure last weekend of First Republic Bank and this week's selloff in shares of other regional banks. "I think the market was really pricing in some strong accommodation from the Fed in the second half of the year," said Blair Shwedo, head of investment grade trading at U.S. Bank.
Powell's remarks will come after a slew of economic data released this week
Data on Tuesday showed new job openings in March dropped to
their lowest level since May 2021, while Monday data showed
slightly stronger-than-expected purchasing in the manufacturing
sector.
The yield curve between two-year Treasury notes and 10-year
bonds , a reliable indicator of expectations for
the economy, was last inverted negative 55.7 bps.
On Thursday, the Treasury Department is slated to auction
$50 billion in four-week bills and $45 billion in
eight-week bills .
The yield on existing four-week bills remained unchanged,
while the yield on eight-week bills ticked up 4.6 bps to 5.128%.
Treasury on Wednesday said it plans to keep coupon issuance
across all maturities through July amid an uncertain outlook for
the debt limit, announcing total quarterly refunding of $96
billion.
Sales of $40 billion in U.S. three-year notes, $35 billion
in 10-year notes, and $21 billion in 30-year bonds are slated
for next week, unchanged from the last refunding announcement.
On Friday, the government is scheduled to release its latest
nonfarm payroll employment figures, which will further help the
Fed determine its course for rates.
May 3 Wednesday 10:42AM New York / 1442 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 5.0825 5.2202 -0.007
Six-month bills 4.825 5.0143 -0.006
Two-year note 99-227/256 3.9346 -0.045
Three-year note 100-82/256 3.6339 -0.059
Five-year note 100-118/256 3.3987 -0.067
Seven-year note 100-184/256 3.3836 -0.065
10-year note 101 3.3787 -0.060
30-year bond 99-32/256 3.6733 -0.059
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 27.00 -1.25
spread
U.S. 3-year dollar swap 17.00 0.00
spread
U.S. 5-year dollar swap 10.25 0.50
spread
U.S. 10-year dollar swap 3.25 1.00
spread
U.S. 30-year dollar swap -40.00 1.00
spread
(Reporting by Matt Tracy; Editing by Nick Macfie)
