Treasury curve flattens
June 3, 2026
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–Fairly quiet yesterday with main theme being curve flattening. 2/10, down 1.8 at 40.6 (4.047/4.453) is lowest since April 2025 and 5/30 at 79.1 (4.176/4.965) is lowest since May 2025. High in 2/10 in Feb was 72.5. On the SOFR strip, back month calendars are also edging to new lows, for example red/green pack spread settled -8.75 (9608, +0.125 and 9616.75, +1.25). Net changes aren’t large but the trend reflecting somewhat tighter monetary policy remains in force. Peak contracts on SOFR strip now SFRU8 and Z8 (moved back a slot) at 9617. All SOFR contracts in first 4 years are between 3.83% and 4.02%.
–This morning US and Iran are trading attacks, oil is marching higher (current 96.30 +2.54) with modest weakness resulting in ES. Bitcoin continues to flounder. On May 6 it was 80.8k and this morning close to 67k, a decline of 17% in a month. $/yen is back near 160 even as Ueda “says BOJ needs to keep raising rates to contain inflation” (BBG).
–News today includes ADP expected 120k from 109k last. ISM Services expected 53.8 from 53.6. Factory Orders expected 4.6% from +1.5 last. Fed’s Beige Book in the afternoon. Friday’s NFP expected +85k. Two weeks from FOMC. Does Warsh accommodate the tech surge?
–This morning MRVL is 320, having been below 100 at the end of March. Some astonishing moves. On a more prosaic level, Victoria’s Secret was a bit above 40 at the end of March, but jumped 48% yesterday to just over 80. Maybe it’s all part of the Ozempic economy, with CAG (Conagra) making a new low with p/e 7.2 and dividend yield 10.9, and Chipotle (CMG) breaking out to a new low as well, cut in half from the high last July.
