A large slate of corporate debt sales on Monday also weighed on the bond market. Benchmark 10-year yields were last at up 7 basis points on the day at 3.519%, 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 9 basis points to 4.012%.
The yield curve between two-year and 10-year notes was last at minus 49 basis points, reflecting
continuing concerns about an upcoming recession.
U.S. banks tightened credit standards over the first months
of the year and saw weakness in loan demand from businesses and
consumers, Federal Reserve survey data released on Monday showed
in the latest indication that higher central bank interest rates
were starting to bite in the finance sector.
U.S. consumers said last month they expected slightly lower
inflation in a year's time, the New York Fed said in a separate
report that also showed the bank stresses that kicked off in
March weren't weighing heavily on the moods of Americans.
Meanwhile, U.S. households still have some $500 billion in
excess savings compared to before the COVID-19 pandemic that
could support consumer spending late into this year, according
to research published on Monday by the San Francisco Fed.
Consumer Price Index (CPI) data due on Wednesday is the
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 68 basis
points of cuts by year-end. Investors are also focused on whether Congress will raise
the debt ceiling in time to avoid a catastrophic default.
U.S. Treasury Secretary Janet Yellen on Sunday said that a
failure by Congress to act on the debt ceiling could trigger a
"constitutional crisis" that also would call into question the
federal government's creditworthiness.
Yellen warned of possible financial market consequences if
the debt ceiling is not raised by early June, when she has said
the federal government could run short of cash to pay its bills.
Yields on one-month Treasury bills were last at
5.447%, after hitting a record high of 5.739% on Friday.
May 8 Monday 3:00PM New York / 1900 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 5.105 5.2398 -0.025
Six-month bills 4.89 5.0801 -0.025
Two-year note 99-190/256 4.0116 0.090
Three-year note 100-18/256 3.7238 0.085
Five-year note 100-2/256 3.4981 0.079
Seven-year note 100 3.4999 0.076
10-year note 99-216/256 3.5186 0.073
20-year bond 99-88/256 3.9227 0.070
30-year bond 96-80/256 3.8335 0.071
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 23.25 -1.75
spread
U.S. 3-year dollar swap 14.25 -1.50
spread
U.S. 5-year dollar swap 9.00 -1.25
spread
U.S. 10-year dollar swap 1.00 -1.25
spread
U.S. 30-year dollar swap -43.50 -1.75
spread
(Reporting by Karen Brettell; Editing by Jonathan Oatis and Andrea Ricci)
