TREASURY WRAP: T-NOTE FUTURES (M6) SETTLE 4+ TICKS HIGHER AT 110-01+

Treasuries saw gains amid risk-on trade as Axios reported an agreement regarding a 60-day US-Iran ceasefire extension.

THE DAY: Treasuries were already grinding higher through the US morning, albeit seeing limited moves to the cooler than expected US PCE report. The main move came on the aforementioned Axios story, which noted that US and Iran have reached an agreement on a 60-day MoU to extend the ceasefire and launch negotiations on Iran's nuclear programme, but Trump is yet to give it his final approval. The Axios report added that Trump asked to take a "few days" to think about it. As such, this saw T-Notes rose to session highs, but has since pared off highs to trade rangebound through the US afternoon. While later reports in Tasnim refuted that an MoU has been agreed, participants will be awaiting confirmation from either side regarding the MoU. Looking to Friday, the calendar is light, but there are a fair few Fed speakers scheduled throughout the day (Kashkari, Schmid, Bowman, Paulson, Daly).

In supply, the US sold USD 77bln of 7yr notes. The stop-through was 0.1bps, vs. the prior 0.5bps tail and the six auction average of 0.3bps. Bid-to-cover was 2.52x, more or less in line with the prior 2.51x and the average 2.48x. Looking at the breakdown, Dealers took 10.4% (prev. 11.6%, six-auction average 11.3%), Direct took 11.2% (prev. 30.0%, six-auction average 27.5%), and indirect took 78.4% (prev. 58.4%, six-auction average 61.2%). Note, there was no reaction seen in wake of the auction.

• US sold 4-week bills at high rate of 3.63% (prev. 3.610%), B/C 3.76x (prev. 2.60x); sold 8-week bills at a high rate 3.615% (prev. 3.600%), B/C 3.08x (prev. 2.77x)
• US sold USD 77bln of 7yr notes; stop-through 0.1bps. Click here for full 7yr note results.

• EFFR at 3.62% (prev. 3.62%), volumes at USD 106bln (prev. USD 113bln) on May 27th.
• SOFR at 3.63% (prev. 3.63%), volumes at USD 3.73tln (prev. USD 3.72ln) on May 27th.
• NY Fed rrp op demand at USD 1.163bln (prev. 1.853bln) across 7 counterparties (prev. 7)