US Treasury yields saw a steepening curve during Monday's narrow-range trading, with price action subdued due to a lack of major catalysts to trigger larger moves. Stabilizing oil prices provided support for short-term bonds, which outperformed longer-dated debt throughout the session as market expectations for Federal Reserve policy remained steady. The US Treasury Department will commence this week's debt auctions on Tuesday, starting with the sale of $58 billion in three-year notes, followed by reopenings of $39 billion in 10-year notes on Wednesday and $22 billion in 30-year bonds on Thursday.
Short- and medium-term Treasury yields were down by as much as 2 basis points shortly after 3 p.m. New York time, while long-term yields edged higher on the day, pushing the 2s10s spread up by 1 basis point and the 5s30s spread up by 2.5 basis points. The yield on the benchmark 10-year US Treasury note traded around 4.48%, close to its previous closing level.
As price action remained range-bound, trading volume in Treasury futures was only about 60% of the 20-day average as of 3 p.m. New York time, with block trade flows also scarce.
Market expectations for Fed policy held steady, with swap contracts pricing in roughly 7 basis points of tightening for the July meeting and about 30 basis points of cumulative rate hikes for the year, largely unchanged from last Thursday's close.
As of 3:56 p.m. ET, the 2-year Treasury yield was at 4.1101%,
the 5-year Treasury yield was at 4.1985%,
the 10-year Treasury yield was at 4.4693%,
the 30-year Treasury yield was at 4.9844%,
the 2s10s yield spread was at 35.71 basis points,
and the 5s30s yield spread was at 78.42 basis points.
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