U.S. Treasury bonds gained during Wednesday's trading session, buoyed by a drop in oil prices following comments from President Donald Trump indicating that matters regarding Iran were in a "final stage." The subsequent auction of 20-year bonds met expectations, and further remarks from Trump on Iran helped sustain the bond rally. The President's initial comments triggered a surge in Treasury futures volume, with approximately 200,000 June 10-year contracts changing hands within two minutes. Shortly after 3 p.m. New York time, Treasury yields fell by 7 to 10 basis points, led by gains in 5-year to 10-year notes. This movement widened the 5-year/30-year yield spread by nearly 4 basis points on the day to around 89 basis points, approaching its intraday high. The yield on the 10-year Treasury note neared 4.57%, declining by nearly 10 basis points for the session. As of 3 p.m., Treasury futures trading volume was 55% above the 20-day average, supported by heavy activity in the morning session. The majority of the day's gains occurred after Trump's "final stage" remarks. Around 11:15 a.m., 200,000 10-year Treasury futures contracts traded within two minutes. July WTI crude oil futures fell by as much as 7% at one point, closing down 5.7%. The 20-year Treasury auction stopped at a yield of 5.122%, matching the when-issued yield at the bidding deadline. Longer-dated bonds showed a muted reaction to the auction results. Primary dealers were awarded 9.4% of the issue, slightly below the previous auction. Indirect bidders' share increased modestly to 67.7%, while direct bidders' share remained steady at 22.9%. The yield on the U.S. 2-year Treasury note fell 8 basis points to 4.0381%. The yield on the U.S. 5-year Treasury note fell 10.5 basis points to 4.221%. The yield on the U.S. 10-year Treasury note fell 10.1 basis points to 4.5656%. The yield on the U.S. 30-year Treasury note fell 6.9 basis points to 5.1116%. The yield spread between U.S. 5-year and 30-year Treasuries widened by approximately 3.6 basis points to 88.88 basis points. The yield spread between U.S. 2-year and 10-year Treasuries narrowed by approximately 1.6 basis points to 52.75 basis points.
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