Treasury Curve Action: longer yields led to steepening
Treasury Curve Action: longer yields led to steepening on the session by a large margin, given that the 2-year yield is essentially flat near 2.595% even as the bond yield backed up 5.7 basis points to 3.024%. Some momentum behind the steepener came following pressure from Trump on the Fed to forgo tightening (presumably inflationary if followed). Another catalyst was the earlier announcement by the BoJ that it is mulling "modifying the yield curve target to allow for a 'natural rise' in long-term rates," though they were quick to portray this as NOT tightening. The JGB yield backed up from session lows near 0.032% to 0.039%. Sources are also noting the massive flood of peak corporate earnings next week, which could cause some follow-up debt issuance and rate-lock hedging, in addition to the $141 B in T-bill supply. The 2s-10s spread jumped out 4 bp to +29 bp; the 2s-30s is out 5.7 bp to +42.9 bp; and the 5s-30s is out 3.6 bp to +26.3 bp.