TREASURY WRAP: T-NOTE FUTURES (M6) SETTLE 1+ TICK HIGHER AT 110-20+

Treasuries were little changed on the session, with the curve slightly flattening as front-end yields marginally underperformed. At settlement, 2-year +2.1bps at 3.888%, 3-year +1.9bps at 3.910%, 5-year +1.5bps at 4.021%, 7-year +1.1bps at 4.198%, 10-year +0.4bps at 4.378%, 20-year -0.2bps at 4.956%, 30-year -0.1bps at 4.965%. settlement, 

THE DAY: T-notes largely meandered overnight before catching a bid in the US morning on reports that Iran had sent a revised proposal via Pakistan to the US. The headlines weighed on crude prices, lifting Treasuries to session highs. However, the move reversed as subsequent reports suggested nuclear issues would not be addressed in the proposal, instead focusing on ending the war, which saw oil rebound and Treasuries pare gains. Late trade saw further downside in T-notes after President Trump said he is not satisfied with Iran’s proposal, reigniting upside in crude and pushing Treasuries back lower. Geopolitics and oil once again dictated price action, with intraday swings in crude driving moves across the curve. Fed speak resumed, with Logan, Hammack and Kashkari outlining their dissent to the FOMC statement, where all favoured removal of the easing bias, although the majority opted to retain it. On the data front, ISM Manufacturing PMI was unchanged despite expectations for a rise. Employment deteriorated further, while prices paid surged to 84.6 from 78.3, above expectations, and new orders improved. Elsewhere, trade developments saw President Trump announce an increase in tariffs on EU cars and trucks to 25% from 15%, citing a lack of compliance with the trade agreement. Overall, Treasuries were rangebound but tilted weaker into the close, with geopolitics and oil continuing to dominate direction, while data and Fed speak had limited lasting impact.

SUPPLY

Bills

• US to sell USD 77bln 26-week bills and USD 89bln of 13-week bills on May 4th, and USD 75bln of 6-week bills on May 5th; all to settle on May 7th

STIRS/OPERATIONS

• Fed Pricing: June -0.4bps (prev. +0.8bps), July -1.2bps (prev. -1.2bps), Sept -2.3bps (prev. -2.3bps), Dec +0.7bps (prev. -0.8bps)
• NY Fed RRP op demand at 0.607bln (prev. 8.261bln) across 5 counterparties (prev. 12)
• SOFR at 3.66% (prev. 3.63%), volumes at USD 3.275tln (prev. USD 2.964tln) on April 30th
• EFFR at 3.64% (prev. 3.64%), volumes at USD 90bln (prev. USD 87bln) on April 30th