Newsquawk Logo

TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 2 TICKS HIGHER AT 106-05+

A curve flattening driven by a firming front end against a rallying long end is the classic signature of a market pricing tighter policy while doubting the durability of the conditions driving it.

Newsquawk StaffPublished On the live feed at — 3 more headlines followed before this page went public
Newsquawk headlinesUTC

Citi (C) expects FY DOTCE to finish a bit above the 11% top end of its 10-11% guidance range

European Closes: Euro Stoxx 50 -0.79% at 6,275, DAX -0.60% at 25,415, CAC 40 -0.76% at 8,118, FTSE 100 +0.44% at 10,698, SMI +0.75% at 13,879, FTSE MIB -1.68% at 51,629, IBEX 35 -1.38% at 19,566, PSI -1.52% at 9,380, AEX -0.04% at 1,098

TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 2 TICKS HIGHER AT 106-05+

Iran has no plans for talks under current circumstances, reports Ghaderi

US FX WRAP: Dollar gains amid risk-off sentiment as major risk events await

Open the platform and use it. The whole workspace is free to try, with no signup and no card. When you want the headlines arriving live instead of on a delay, Newsquawk Pro is £24.99 for 7 days.

Try the platform free
Free. No signup, no card.

Yield curve flattens as oil pares early gains while AI CEOs call for slowdown in AI development. At settlement, 2-year +0.7bps at 4.637%, 3-year +1.0bps at 4.731%, 5-year unchanged at 4.788%, 7-year -0.5bps at 4.869%, 10-year -1.0bps at 4.959%, 20-year -2.2bps at 5.367%, 30-year -2.9bps at 5.327%.

THE DAY: The Treasury yield curve flattened on Monday, with earlier losses reversing as oil pared from its highs, while participants also weighed the potential implications of a slowdown in AI development for the bond market. Some technical trade may have also been a factor after the 10-year yield briefly rose above 5.00%, for the first time since 2023.

Oil was initially supported after the Iran-Gulf nations meeting was postponed and Saudi Arabia's East-West pipeline was shut down, with the crucial pipeline expected to remain mostly out of service for several weeks while repairs are carried out. However, a series of more constructive geopolitical developments subsequently saw crude retreat from its peaks, coinciding with Treasuries moving higher. US President Trump announced that Ukraine and Russia had agreed not to strike each other's energy infrastructure, before later saying that Iran also wants to make a deal and that the US is open to the concept. Meanwhile, ILNA, citing Pakistani sources, reported that the US is seeking a step-by-step agreement with Iran.

As oil reversed from its highs, Treasuries moved off their lows and the long end ultimately rallied on the session. Another potential factor was the focus on calls for a slowdown in AI deployment from several prominent AI CEOs, including OpenAI's Altman, xAI's Musk and Anthropic's Amodei. The developments weighed heavily on semiconductor and memory names, but also have potential implications for the bond market. A material slowdown in AI development could reduce the enormous CapEx requirements associated with the AI buildout and, in turn, reduce the need for companies to tap debt markets to fund that investment. Given elevated corporate issuance to fund AI-related CapEx has been one source of upward pressure on yields this year, expectations for reduced future issuance may have provided some support to Treasuries, particularly further out the curve.

At the front end, however, yields remained under upward pressure as expectations for a Fed hike on Wednesday continued to build. An updated Reuters poll found that 85% of forecasters now expect the Fed to hike by 25bps, versus the previous poll which showed a consensus for rates to remain unchanged. Money markets are assigning around a 90% probability of a hike this week, with another hike fully priced by year-end and almost two further hikes priced through 2027.

SUPPLY

Notes

  • US to sell USD 13bln of 20yr bonds on September 15th; to settle on Sept. 18th; to sell USD 19bln of 10yr TIPS on Sept. 17th; to settle on Sept. 30th

Bills

  • US to sell USD 92bln of 13-wk bills and USD 79bln of 26-wk bills on Sept. 14th, to sell USD 75bln of 6-wk bills on Sept. 15th.

STIRS / OPERATIONS

  • Fed Hike Pricing via CME FedWatch: Sept 23.2bps (prev. 21.6bps), Dec 50.7bps (prev. 48.5bps)
  • EFFR at 3.63% (prev. 3.63%), volumes at USD 105bln (prev. USD 108bln) on September 11th
  • SOFR at 3.62% (prev. 3.62%), volumes at USD 2.867tln (prev. USD 2.921tln) on September 11th
  • NY Fed RRP op demand at 1.42bln (prev. 5.25bln) across 4 counterparties (prev. 3) on September 14th
  • NY Fed plans to conduct approximately USD 15.6bln in reinvestment purchases (prev. USD 17.0bln) and no reserve management purchases over the noted monthly period (Sept 15th - Oct 14th).
Context

The split here is between two distinct channels: the front end is trading the near-term Fed path, where a poll-driven repricing toward a hike pushes 2s and 3s cheaper, while the long end is trading the supply and demand backdrop, with an oil reversal and talk of reduced AI-related issuance pulling duration higher. Episodes where geopolitical crude premia fade intraday have tended to unwind the inflation-hedge bid in the belly and long end first, which is the observed sequence. The AI issuance angle is newer in character but mechanically familiar: expectations of lower corporate supply reduce term premium pressure furthest from the front. The 10-year brushing a round-number yield level before reversing is a recurring technical pattern that has historically invited mean-reversion flows rather than breakouts on first tests. Worth noting is that front-end pricing around a fully priced near-term hike leaves the next Fed communication, not the data, as the dominant risk for that segment, while long-end direction stays hostage to crude and the issuance calendar.

Related headlines

The whole workspace, free to try.

Try it free
Newsquawk Logo

© 2026 Newsquawk. All rights reserved.