TREASURY WRAP: T-NOTE FUTURES (U6) SETTLE 12+ TICKS LOWER AT 109-07+

T-notes sold across the curve despite soft energy prices as focus remains on hawkish Fed shift. At settlement, 2-year +5.7bps at 4.236%, 3-year +6.1bps at 4.253%, 5-year +5.7bps at 4.289%, 7-year +5.3bps at 4.391%, 10-year +5.4bps at 4.509%, 20-year +5.2bps at 4.965%, 30-year +4.5bps at 4.945%.

THE DAY: Treasury yields rose across the curve on Monday despite lower oil prices and an absence of major US economic data, with markets continuing to digest last week's hawkish FOMC decision and Chair Warsh's first press conference. The move suggests participants are increasingly shifting their focus away from geopolitical developments and towards the implications of a more hawkish Federal Reserve.

There was no major US data to digest on Monday, while Fed Governor Waller delivered opening remarks at an event but did not comment on monetary policy or the economic outlook. Attention remained on geopolitics. Over the weekend, Iran announced it had closed the Strait of Hormuz following alleged ceasefire violations, sending oil prices higher at the reopening. However, those gains quickly reversed as reports pointed to continued progress in negotiations. Iranian officials later said significant progress had been made in talks in Switzerland, while Qatar and Pakistan both praised the constructive atmosphere surrounding discussions between the US and Iran.

Additional downside pressure in crude emerged after Vice President Vance stated that the Strait of Hormuz remained open and noted that Iran had agreed to allow IAEA inspectors back into the country. Oil prices were also weighed on after the US officially suspended sanctions on Iranian energy production, delivery and sales for 60 days. Despite the continued decline in crude prices, Treasury yields remained higher throughout the session, suggesting the market is increasingly focused on the Fed's hawkish shift rather than geopolitical developments.

Attention now turns to this week's Treasury supply, including 2-, 5- and 7-year note auctions. The backdrop appears relatively supportive, with higher outright yields, reduced geopolitical uncertainty, lower bond market volatility, and a more hawkish Federal Reserve potentially helping underpin demand.

SUPPLY

Notes

• US to sell USD 69bln of 2-year notes on June 23rd, USD 70bln of 5-year notes on June 24th and USD 44bln of 7-year notes on June 25th; all to settle June 30th (as expected)
• US to sell USD 28bln 2year FRN on June 24th; to settle June 26th

Bills

• US Treasury sells 6-month bills at high rate 3.840%, B/C 2.51x; sells 3-month bills at high-rate 3.695%, B/C 2.68x

STIRS/OPERATIONS

• Fed Pricing: 41bps (prev. Dec 39bps)
• EFFR at 3.63% (prev. 3.63%), volumes at USD 115bln (prev. USD 107bln) on June 18th
• SOFR at 3.62% (prev. 3.63%), volumes at USD 3.148tln (prev. USD 3.114tln) on June 18th
• NY Fed RRP op demand at 3.92bln (prev. 0.25bln) across 4 counterparties (prev. 4) on June 22nd