TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 18+ TICKS LOWER AT 105-14+

Yields bear flatten as Trump says US does not need Iran deal. At settlement, 2-year +12.1bps at 4.867%, 3-year +12.7bps at 4.917%, 5-year +12.1bps at 4.949%, 7-year +11.4bps at 5.014%, 10-year +10.5bps at 5.105%, 20-year +8.2bps at 5.482%, 30-year +7.9bps at 5.437%.

THE DAY: Treasury yields rose across the curve on Thursday, with the curve bear flattening as front-end yields rose faster than those at the long end. The move appeared driven by renewed geopolitical uncertainty surrounding Iran and continued hawkish repricing of Fed expectations following Tuesday's hotter-than-expected CPI report.

One of the primary drivers was US President Trump's announcement that the US does not need a deal with Iran, dampening recent optimism surrounding a potential US-Iran agreement. Trump also instructed VP Vance to shift his focus towards domestic issues, seemingly reducing the prospect of Vance helping broker an end to the conflict. As a reminder, reports had suggested a potential meeting between Vance and Iranian Security Chief Rezaei was being discussed.

Meanwhile, a risk-off move was seen pre-market following the immediate resignation of Nvidia (NVDA) CEO Huang, which initially sent shares sharply lower. Disappointing guidance from Nebius (NBIS) also weighed on the neocloud sector. However, equities recovered after the opening bell, with NVDA rebounding from its lows and the broader indices gradually moving higher. Weakness among neocloud names appeared to benefit mega-cap hyperscalers, while Huang's resignation provided support to AMD (AMD) and Broadcom (AVGO).

Fed commentary was also in focus. Hammack said she favours smaller and steadier rate moves, marking her first remarks since Waller raised the possibility of a 50bps hike in December and the hotter-than-expected October CPI report. Her preference for gradual adjustments suggests she may be reluctant to support a larger move. Meanwhile, Barr highlighted the risk of significant near-term labour market disruption from AI, offering a more dovish consideration. Goolsbee said the Fed is failing on the inflation side of its mandate and that there is plenty of room to discuss policy options, although he did not want to prejudge the outcome. He also warned that AI investment could act as a form of stimulus and that policymakers should remain alert to signs of broader economic overheating. Daly reiterated that further tightening will likely be needed, warning that inflation is spreading into services, where price pressures tend to be sticky. However, she stressed that the timing and extent of additional tightening do not need to be decided immediately.

Elsewhere, the Fed released its 2027 meeting schedule, confirming there will be no October meeting. Warsh had previously indicated that one autumn meeting would focus on strategy rather than an interest rate decision, with two strategy meetings planned annually from 2028. The final meeting of 2027 will take place in November.

The USD 25bln 30-year Treasury auction was soft but had little market impact. The offering tailed by 0.4bps, while the bid-to-cover ratio declined and dealer takedown increased amid weaker indirect participation, although direct demand remained broadly stable.

US data also had little impact. Initial jobless claims rose to 200k from 191k, above the 195k forecast, although the four-week average was unchanged. Continuing claims fell below 1.7mln, while existing home sales declined to 3.75mln from 3.97mln, below the 3.85mln forecast.

• US sold USD 25bln of 30-year bonds; tail 0.4bps.

• Fed Hike Pricing via CME FedWatch: Dec 28.3bps (prev. 27.4bps), Mar 65.1bps (prev. 58.5bps).
• EFFR at 3.88% (prev. 3.88%), volumes at USD 98bln (prev. USD 95bln) on November 10th
• SOFR at 3.89% (prev. 3.88%), volumes at USD 3.159tln (prev. USD 3.1tln) on November 10th
• NY Fed RRP op demand at USD 0.25bln (prev. USD 0.15bln) across 1 counterparty (prev. 3) on November 12th.
• US Treasury Buyback (1-yr to 10-yr TIPS, max USD 750mln): Accepted USD 556mln of USD 3.22bln offered; 8 of 28 eligible issues accepted.