The US Treasuries market has shown signs of strength in recent days, despite ongoing geopolitical tensions. The yield on the 10-year Treasury note is currently trading at 4.29%, which is a full 0.25-0.75 basis points higher than the previous day’s close. Equities are also higher by another 0.2% today, with the S&P 500 index reaching new heights. Meanwhile, oil prices have pulled back slightly, but remain above $97.5 per barrel due to ongoing optimism surrounding US-Iran talks.

In terms of the yield curve, it has steepened somewhat in recent days, with the 2-10 year spread narrowing by 0.7 basis points to 52.15bp. The 5-30 year spread has also tightened by 0.2 basis points to 98.7bp. However, despite these movements, the yield curve remains relatively rangebound, with little change in the longer end of the curve.

The FOMC meetings pricing has also seen a slight decrease in duration, with end-of-year 2026 pricing now indicating a cumulative 9 basis point cut in yields. Spreads have been mixed, with the front-end to the belly tightening by 0.1-0.2 basis points, while the 10-year and longer parts of the curve have widened by 0.2 basis points.

In terms of futures activity, there has been a lone US Ultra Treasury note and SOFR block, with open interest changing indicating bullish positions. The desk has seen mainly interest in steepening the curve, with the 5-30 year spread being the structure of choice for many investors. However, some profit taking has been seen going through as New York opens, with new longs in the front-end and short covering in the longer part of the curve.