Bond Prices Slide Back

U.S. Treasury prices started the session with a bid but fell back as the as-expected results of the French elections drew out safety buying while coming Treasury and corporate supply added weight. Technical selling has added to pressure as the 10-year went after Friday’s high yields, near 2.38% with an eye to 2.40%. The German Bunds and U.K. Gilts also backed-off better levels. Cleveland Federal Reserve President Loretta Mester worried that the Fed could fall behind the curve, worrying that that would require the Fed to tighten rates steeply.

The 30-year recently traded near 3.015% from a 3.0225% high yield, a 2.962% overnight low and a 2.99% close Friday. The 10-year yield was near 2.376% from a 2.3825% high, a 2.33% low and a 2.352% close. The five-year was near 1.903% from a 1.9147% high, a 1.8601% low and 1.883% Friday. The two-year was near 1.326% from a 1.3545% high, a 1.306% low and a 1.318% close.

The curve trade saw flattening trades unwound with the spread gap between the two- and 10-year yields pushed along a steeper slope near 1.04 plus from 1.03 plus, while the gap between the five- and 30-years widened to 1.11 from 1.10 plus.

By Chris Robinson