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US BONDS: 10Y Yields Move Flat On The Day, Short End Underperforms

US BONDS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America

10Y Treasury yields are now flat on the day, falling 6+bp since the solid 10Y Note refunding auction at 1300ET and down 8bp from the highs set post-Services ISM selloff.

  • The short end has held onto earlier losses, however: 2Y yields are up nearly 4bp on the session and 1bp since ISM (albeit 3bp off highs), resulting in a twist flattening in the curve.
  • The short end underperformance corresponds with a slight uptick in the futures-implied Fed rate path (up 5-6bp through end 2025 vs Monday's close): while a 25bp cut is still basically fully priced for Thursday, December is not a done deal (19bp incremental), with 7bp less cuts through 2025 (114bp total). Overall the rate path is a little higher than it was before Friday's soft payrolls report. See chart below.
  • Overall rates will remain highly sensitive to election headlines - checking on levels, 2-Yr yield is up 3.7bps at 4.1972%, 5-Yr is up 2.1bps at 4.1669%, 10-Yr is down 0.2bps at 4.2828%, and 30-Yr is down 2.3bps at 4.4447%.
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10Y Treasury yields are now flat on the day, falling 6+bp since the solid 10Y Note refunding auction at 1300ET and down 8bp from the highs set post-Services ISM selloff.

  • The short end has held onto earlier losses, however: 2Y yields are up nearly 4bp on the session and 1bp since ISM (albeit 3bp off highs), resulting in a twist flattening in the curve.
  • The short end underperformance corresponds with a slight uptick in the futures-implied Fed rate path (up 5-6bp through end 2025 vs Monday's close): while a 25bp cut is still basically fully priced for Thursday, December is not a done deal (19bp incremental), with 7bp less cuts through 2025 (114bp total). Overall the rate path is a little higher than it was before Friday's soft payrolls report. See chart below.
  • Overall rates will remain highly sensitive to election headlines - checking on levels, 2-Yr yield is up 3.7bps at 4.1972%, 5-Yr is up 2.1bps at 4.1669%, 10-Yr is down 0.2bps at 4.2828%, and 30-Yr is down 2.3bps at 4.4447%.