U.S. Treasury Yields Rise, Curve Steepens
0618 GMT – U.S. Treasury yields extend their rise in the early European trade, pulled by the long end of the curve ahead of the Federal Reserve's meeting outcome on Wednesday. The latest U.S. employment data is constraining the Federal Reserve, and Pimco doesn't expect the Fed to cut rates until later this year, economist Tiffany Wilding says in a note. 'That would come once data shows a concrete slowdown or contraction in the labor market,' she says. The two-year Treasury yield is trading 1 bp higher at 3.845%; the 10-year Treasury yield rises 3 bps to last trade at 4.370%, while the 30-year Treasury yield increases 4 bps to last trade at 4.865%, according to LSEG data. (emese.bartha@wsj.com)
0612 GMT – The long end of the German Bund curve is facing supply pressure from a syndicated tap of the August 2056 Bund, says Commerzbank Research's Christoph Rieger in a note. 'In Bunds, the announcement of the second and final syndication for this year, the 30-year Bund tap, is adding to the ultralong steepening bias,' the head of rates and credit research says. The 10-to-30-year segment of the German government bond curve is hitting its steepest level since 2021, he says, referring to the widening gap between the 10- and 30-year yields. The 10-to-30-year German yield spread is around 46 basis points, according to Tradeweb. Besides the syndicated tap, Germany will also hold a 4.5 billion euro auction for the April 2030 Bobl. (emese.bartha@wsj.com)
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