TREASURY WRAP: T-NOTE FUTURES (U6) SETTLES 1 TICK HIGHER AT 109-26+

Treasuries saw slight gains amid risk-on trade as Trump alluded to a soon-to-be deal with Iran on Truth, albeit with pushback later from the Iranian side.

THE DAY: Overall, Treasuries traded within pretty tight ranges on Friday, amid a lack of tier 1 US data, although there was a handful of Fed speakers, ahead of US NFP and ISMs next week. That said, price action was dominated by the geopolitical landscape; while President Trump hinted at an agreement with Iran, Iranian press refuted some of Trump's remarks, calling his claims about a US-Iran deal as a "mix of truth and lies". As such, Treasuries saw two-way action on the mixed reporting, before seeing another bout of pressure on NYT reports which suggested that the President’s meeting in the Situation Room lasted about two hours, but did not reach a decision on any new deal with Iran; and even though the administration believes it is close to an agreement, certain matters are still being debated, including the unfreezing of funds for the Iranians. Into the weekend attention will be on any further updates on the Middle East, and if a deal/compromise can be reached.

Back to the Fed speakers, Schmid (2028 Voter) said that his primary concern is inflation, which is "too hot", and that monpol is not very restrictive right now, and officials may need to weigh how to make it more restrictive. Daly (2027 voter) cautiously optimistic about the economy. Bowman (voter) remarked progress on lowering inflation has stalled, would consider a shift in the policy outlook if war-driven inflation broadens, and reacting to a temporary energy shock could weigh on the economy and that the Fed can look through an energy shock if it remains credible on monetary policy. Paulson (2026 voter) noted inflation pressures are weighing on the economy and firms are having a hard time planning for future.

STIRS/OPERATIONS

• EFFR at 3.62% (prev. 3.62%), volumes at USD 106bln (prev. USD 106bln) on May 28th.
• SOFR at 3.62% (prev. 3.63%), volumes at USD 3.139tln (prev. USD 3.176ln) on May 28th
• NY Fed rrp op demand at USD 11.677bln (prev. 1.163bln) across 11 counterparties (prev. 7)