Five-Year Leads Bonds Higher

U.S. Treasuries resumed their rally early Monday as equities ground lower with the five-year leading in choppy volume trade. The market been boosted on flight-to-quality buying as comments out of the White House further stir concerns over protectionist policies. Futures traders note the upside should be tempered by supply with a run of Treasury auctions through the week.

The 30-year recently traded 2.998% after an overnight slide to a high yield/low price at 3.0552% and a 3.046% close Friday. The 10-year is near 2.414% from a 2.4728% low and 2.467% Friday. The five-year is near 1.8785%, trading back to Wednesday levels, from a 1.9449% low and 1.936% close. The two-year is near 1.152% from a 1.2048% low and 1.197% close.

The curve trade has been choppy and mixed with the yield differential between the two- and 10-years tightened to a flatter at 1.12 after closing near 1.27 the steepest slope since late December, on a closing basis. The spread between the five- and 30-year yields has been pushed steeper to 1.12 from near 1.10 Friday.

By William Spence