Treasury Action: cooled below highs
Treasury Action: cooled below highs after surging with those of Bunds earlier. The drop in new home sales and upward revision on U. Michigan sentiment mostly offset one another. Earlier Bunds tanked on news the ECB may lend out more bonds to unfreeze the repo market, which contributed to the bounce in yields on both sides of the Pond. The 2-year yield backed up from the 1.10% area to test 1.14% on the third wave of selling vs 1.088% lows; the 5-year yield jumped from 1.78% to clear 1.86% before easing to 1.84%; the 10-year yield bounced from 2.29% to test 2.40% (61.9% multi-year retrace) then eased to 2.38%; and the cash bond yield leapt from 2.985% to clear 3.07% before slipping ot 3.05%. The belly continues underperforming the wings with yields now 3.6-7.0 bps higher along the curve. The 2s-10s spread is 1.5 bp steeper near +125 bp and the 5s-30s spread 2 bp tighter near +121 bp.