Newsquawk Logo

TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLED 12 TICKS HIGHER AT 106-05+

A bull flattening in the sessions immediately after a hike is the classic credibility trade: when a central bank tightens against political pressure and the market reads it as genuine resolve, the long end rallies on lower inflation risk premia even as the front end stays anchored to the new policy rate.

Newsquawk StaffPublished On the live feed at — 4 more headlines followed before this page went public
Newsquawk headlinesUTC

Saudi issues early warning system in Khamis Mushait

BP (BP/ LN) says it met with USW Local 7-1 reps; says company and the union still working on several key issues

TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLED 12 TICKS HIGHER AT 106-05+

US forces have begun dismantling and transferring air defense systems from their positions in the Kurdistan Region, Al Hadath reports

President Trump is expected to sign orders related to land and waterways, Fox reports

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 bull flattens, reversing post-Fed move as Fed credibility gets a boost following Wednesday's hike. At settlement, 2-year -5.7bps at 4.679%, 3-year -7.1bps at 4.752%, 5-year -8.5bps at 4.792%, 7-year -8.7bps at 4.861%, 10-year -8.1bps at 4.939%, 20-year -7.3bps at 5.326%, 30-year -7.1bps at 5.290%.

THE DAY: Treasury yields were lower across the curve on Thursday, with Treasuries and the broader market reversing much of the post-Fed move. Many have cited improved Fed credibility following Wednesday's hike, with the decision reinforcing the Fed's commitment to returning inflation to target despite pressure from US President Trump for lower rates.

Also supporting Treasuries was the move lower in the crude complex. There was little new on the US/Iran front, but several constructive reports emerged regarding the wider region: 1) China reportedly pressed Iran to help rein in the Houthis following a Saudi appeal; 2) Saudi Arabia reportedly asked Oman to seek a two-week truce with the Houthis; and 3) Pakistan's Army Chief urged Iran to convince the Houthis not to attack Saudi Arabian energy facilities. The reports helped oil settle in the red, although geopolitical risks remain, with Trump telling Axios he is at a critical juncture regarding what to do next with Iran.

Elsewhere, US data was mixed. Jobless Claims were strong, maintaining the recent trend of low claims. However, Housing Starts and Building Permits missed expectations, while the Philly Fed index declined M/M but still beat the consensus. Pending Home Sales rose 0.3% M/M, below the 2.0% forecast.

Attention overnight will turn to the BoJ rate decision, where a 25bps hike is widely expected. Meanwhile, Fed speak resumes on Friday with Bowman and Schmid scheduled, followed by Williams several times next week. Next week also sees the 2-, 5- and 7-year Treasury auctions.

SUPPLY

Notes

  • US sold USD 19bln of 10-year TIPS; tail 1.9bps
  • US to sell USD 69bln of 2yr notes on September 22nd, USD 70bln of 5yr notes on Sept. 23rd, and USD 44bln of 7yr notes on Sept. 24th; all to settle Sept. 30th
  • US to sell USD 28bln of 2yr FRN on Sept. 23rd, to settle on Sept. 25th.

Bills

  • US sold 4-wk bills at high-rate 3.820%, B/C 3.02x; sold 8-wk bills at high-rate 3.920%, B/C 3.02x
  • US to sell USD 92bln of 13-wk bills and USD 79bln of 26-wk bills on September 21st; all to settle on Sept. 24th

STIRS / OPERATIONS

  • Fed Hike Pricing via CME FedWatch: Oct 13.9bps (prev. 12.5bps), Dec 32.2bps (prev. 31.8bps)
  • EFFR at 3.63% (prev. 3.63%), volumes at USD 90bln (prev. USD 100bln) on September 16th
  • SOFR at 3.62% (prev. 3.64%), volumes at USD 2.931tln (prev. USD 2.952tln) on September 16th
  • NY Fed RRP op demand at 0.28bln (prev. 5.38bln) across 3 counterparties (prev. 4) on September 17th
  • Treasury Buyback [Liquidity support, 7-10-year nominal coupons, max USD 4bln]: Accepts USD 2.385bln of USD 9bln offers, accepts 6 of 10 eligible securities
Context

Episodes of this kind have tended to follow a recognisable sequence, with the initial hawkish repricing of the curve unwound as term premium compresses, and the 2s10s slope rather than the outright level carrying the signal. The day's support from a softer crude complex fits the established pattern in which falling energy prices feed directly into breakevens and pull nominal yields lower at the back end, though headlines tying that move to back-channel diplomacy leave it hostage to reversal. The distinction worth drawing is between a credibility-led flattening, which can persist, and an oil-led one, which historically fades if supply risk reasserts. The follow-ons on the calendar are whether scheduled Fed speakers endorse the post-meeting read, the BoJ decision given its bearing on Japanese demand for Treasuries, and the 2-, 5- and 7-year auctions, where concession and tail behaviour will test how much real-money appetite exists at the lower yields now on offer.

Related headlines

The whole workspace, free to try.

Try it free
Newsquawk Logo

© 2026 Newsquawk. All rights reserved.