Banks and investors are also preparing for the sale of this week's coupon-bearing supply, which will include $40 billion in three-year notes on Tuesday, $35 billion in 10-year notes on Wednesday and $21 billion in 30-year bonds on Thursday. The new supply “will test investors demand for Treasury supply at these levels,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. Yields are rising on “some confidence that we might have gotten past the worst on the regional banking side, and the ongoing demand, just generally speaking, for equities despite everything that’s going on in the world,” he said. Benchmark 10-year yields were last at up 7 basis points on the day at 3.517%, after falling to a one-month low of 3.296% on Thursday. The yields are holding above a seven-month low of 3.253% on April 6.
Two-year yields gained 8 basis points to 3.999%.
The yield curve between two-year and 10-year notes was last at minus 48 basis points, reflecting
continuing concerns about an upcoming recession.
The Federal Reserve’s Senior Loan Officer Opinion Survey due
later on Monday will be watched for signs on whether banks are
pulling back on lending in anticipation of new regulatory
requirements.
Consumer Price Index (CPI) data due on Wednesday is also a
major U.S. economic focus this week as investors try to gauge
whether price pressures will continue to ease, or remain at
levels that could make the Fed likely to continue to raise
interest rates.
Fed funds futures traders are currently pricing in a 93%
likelihood that the Fed will leave rates unchanged at its June
meeting, and 7% odds of an additional 25 basis points hike. But
they also see rates peaking in June, and expect around 69 basis
points of cuts by year-end. May 8 Monday 9:33AM New York / 1333 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 5.1175 5.2528 -0.012
Six-month bills 4.9175 5.1093 0.004
Two-year note 99-196/256 3.9991 0.077
Three-year note 100-24/256 3.7153 0.076
Five-year note 100-2/256 3.4981 0.079
Seven-year note 100 3.4999 0.076
10-year note 99-220/256 3.5167 0.071
20-year bond 99-88/256 3.9227 0.070
30-year bond 96-92/256 3.8308 0.069
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 23.50 -1.50
spread
U.S. 3-year dollar swap 14.75 -1.00
spread
U.S. 5-year dollar swap 9.25 -1.00
spread
U.S. 10-year dollar swap 0.75 -1.50
spread
U.S. 30-year dollar swap -43.00 -1.25
spread
(Reporting by Karen Brettell; editing by Jonathan Oatis)
