Fixed Income Morning Economic Report, 6-2-26

Fixed Income markets are stronger across the board, facilitated by a pullback in energy prices after some positive-leaning geopolitical newsflow. Trump suggested that talks with Iran are continuing at a rapid pace, adding that he thinks an agreement will be made with Iran to extend the ceasefire over the next week.
As for price action, USTs benefit from the lower energy prices this morning, with gains of 10 ticks at 109-29+ at time of writing, currently holding at the upper end of a 109-22 to 109-30 range (vs Monday’s low of 109-09+). From a yield perspective, rates at the belly of the curve are underperforming vs short-dated rates, signalling that traders remain uncertain about near-term geopolitical progress. The 10yr (4.43%) retreating away from the 4.5% we were sitting at yesterday, and another leg lower could see a test of the low from 12 May at 4.41%, SFRZ6 meanwhile rallies to 96.165 having been in a 96.135 to 96.17 range, indicating a 73% chance of a hike by year end. Focus ahead turns to US JOLTS.

On the Docket today; 7:55 am Cleveland Fed President Beth Hammack speech 9:00 am Job openings April (JOLTS)

Video link: https://youtu.be/qyvW45PHTLk