TREASURY WRAP: T-NOTE FUTURES (M6) SETTLE 7+ TICKS HIGHER AT 110-19

Treasuries rose across the curve on Thursday, with yields declining as T-notes gradually pared some of the recent sell-off. At settlement, 2-year −6.4bps at 3.883%, 3-year −6.0bps at 3.908%, 5-year −5.6bps at 4.021%, 7-year −4.7bps at 4.207%, 10-year −4.0bps at 4.390%, 20-year −2.3bps at 4.982%, 30-year −1.3bps at 4.986%.

THE DAY: T-notes saw a steady bid throughout the session, largely tracking weakness in crude prices, with WTI underperforming Brent after the DoE announced it had solicited an exchange of up to 92.5mln bbls from the SPR. The move in oil helped ease inflation concerns and supported the front-end.

Geopolitical headlines were mixed. President Trump proposed a new coalition to help ships navigate the Strait of Hormuz, while separate reports suggested CENTCOM is preparing options for potential military action, including deploying hypersonic missiles to the region. Elsewhere, Israeli sources indicated US/Iran talks could collapse as soon as next week, highlighting the fragile backdrop.

On the data front, March PCE printed largely in line with expectations, while jobless claims fell notably. The releases generated some intraday volatility but ultimately had little lasting impact on direction, with markets continuing to take cues from oil.

Central bank activity was active, with the ECB and BoE both holding rates. ECB sources hinted at a potential hike in June, while BoE Chief Economist Pill dissented in favour of a 25bps increase. Meanwhile, reports of Japanese intervention in FX amid yen strength had little spillover into Treasuries.

In supply, Meta announced plans to raise up to USD 25bln in debt, with demand reportedly reaching around USD 96bln.

Overall, Treasury price action remained driven by moves in crude and geopolitics, with softer oil prices helping yields retrace some of the recent upside.

SUPPLY

Bills

• US sold 8-wk bills at high-rate at high-rate 3.620%, B/C 2.79x; sold 4-wk bills at high-rate 3.600%, B/C 2.92x
• US to sell USD 77bln 26-week bills and USD 89bln of 13-week bills on May 4th, and USD 75bln of 6-week bills on May 5th; all to settle on May 7th

STIRS/OPERATIONS

• Fed Pricing: June +0.8bps (prev. +1.9bps), July -1.2bps (prev. +0.8bps), Sept -2.3bps (prev. +0.8bps), Dec -0.8bps (prev. +3.3bps)
• NY Fed RRP op demand at 8.26bln (prev. 0.75bln) across 12 counterparties (prev. 5) on April 30th
• SOFR at 3.63% (prev. 3.64%), volumes at USD 2.964tln (prev. USD 3.021tln) on April 29th
• EFFR at 3.64% (prev. 3.64%), volumes at USD 87bln (prev. USD 82bln) on April 29th