The US treasury market saw some interesting movements today, with the belly of the curve leading the way. The 10-year maturity was trading at 4.2565%, which is a notable increase from yesterday’s close. This led to underperformance by European government bonds (EGBs), as investors became more risk-averse due to recent economic data releases.

The US treasury curve was mixed, with the 2-10 year spread flattening by 1.2 basis points to 62.5bp. The 5-30 year spread remained unchanged at 99bp. Spreads were wider by 0.25-0.75bp across the board, with the long end of the curve performing particularly well.

The FOMC meeting gaps were lower by 1-1.5bp, and the curve flattened further. The 2026 cut was trading at 43.8bp, while July was down to 24.5bp. Futures block activity in the Asia session was muted, but open interest change indicated new long positions in the belly of the curve.

The desk saw increased interest in steepener trades, particularly in the 5s30s and 10s30s. There was also demand for 10-year notes on the fly from fast money accounts. Spreads remained well bid across the 10-30 year range, with some interest to unwind spread curve flatteners as the long end continued to outperform.