The Treasury market saw a continuation of the recent selloff overnight, with yields across the curve extending their gains from the previous session. The UST complex traded in a 112-24 to 112-09 range before settling near the lows of the day at 112-10, with 10y yields 4bp higher at 4.135%. Meanwhile, 2s10s ended marginally steeper, and 5s30s flattened 3bp. Large block buying failed to stem the move lower, absorbing $3.5 mn FV and $3.8 mn TY bought on block. In options, volatility was bid into the close with straddles ending 1.5 ticks across the TY complex, while skews finally moved hard to the puts.

The selloff in Treasuries came as economic data continued to support the reflation narrative. Better-than-expected Challenger Jobs data provided further evidence of a strong labor market, adding pressure on fixed income markets. The report announced 48,307 job cuts in February, down 55% from the 108,435 job cuts in January. This was a 72% drop from the 172,017 cuts announced during the same month last year.

In SOFR futures, the market further pare 2026 cut pricing overnight. Back-end Whites and Reds bore the brunt of the selling, with the SFRM6/Z6 steepening 4bp and the SFRM6/Z6/M7 6m fly making new highs of -14. However, pared the move somewhat into the close to settle at -16. Front-end pricing ended the day at 3bp into April, a cumulative 9bp into June and just 37bp of cumulative cuts into year-end, a full 25bp less than the first trading day of the month.

In options, flows were balanced with paper using the selloff to continue buying cheap cut plays in whites, while desk flows saw aggressive buying of downside in Whites as protection for hikes pricing in 2026. Vols were little changed in M6, while everything out the curve was bid on the day.