U.S. Treasury Market: Safe-Haven Buying Lifts Short-Dated Notes as Federal Funds Futures Volume Surges

U.S. Treasury prices rose in a bull steepening on Friday, with short- and intermediate-term notes outperforming as safe-haven demand supported the market amid a selloff in large-cap technology stocks. According to Sina Finance, shortly after 3 p.m. U.S. Eastern Time, front- and intermediate-term yields were down about 2 basis points, while the 2s10s and 5s30s spreads widened 1.5 and 3 basis points, respectively. Near the close, month-end duration-extension flows sharply narrowed swap spreads. The Nasdaq 100 was poised to enter its third technical correction of the year after falling about 10% from its peak amid disappointing technology earnings. Treasury futures volume was about 20% above its 20-day average by 3 p.m., and November federal funds futures volume approached 500,000 contracts late in the session amid heavy buying at 96.120. At 4:47 p.m. U.S. Eastern Time, the 2-year Treasury yield was down 1 basis point at 4.5876%, the 5-year yield fell 2.1 basis points to 4.7215%, the 10-year yield declined 0.6 basis point to 4.931%, and the 30-year yield rose 1 basis point to 5.3093%. The 5s30s spread widened about 2.9 basis points to 58.42 basis points, while the 2s10s spread widened about 0.4 basis point to 33.93 basis points. The 10-year yield closed down about 1 basis point at 4.93%, near the lower end of its 4.89%-5.05% range for the week.