Data-driven rebound pushes US Treasury yields into positive territory, core PCE rises 3.3% year-on-year, curve compression persists

汇通财经2026/05/28 13:58

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US Treasury bonds fell in early Thursday trading due to the United States launching a second strike on Iran, but a subsequent short squeeze pushed prices away from their lows. The core PCE month-on-month was 0.2%, below the expected 0.3%. Q1 GDP was revised down to 1.6%, personal income was flat, and durable goods orders surged 7.9%, though details were mixed.
After the data release, US Treasuries rebounded, led mainly by short covering. End-of-month index-linked buying also participated. The 2-year yield was 4.043%, the 10-year was 4.483%, and the 30-year was 5.006%. The 2s10s spread narrowed to 43.97 basis points, and the 2s30s spread narrowed to 96.30 basis points.
The core PCE year-on-year was 3.3%, still far above the Federal Reserve’s 2% target. Today’s data will not shake the Federal Reserve’s stance. However, income failing to keep pace with inflation and consumption being forced to slow down have traders believing an economic slowdown may be approaching, prompting short covering. The price rebound has stalled, the curve compression pattern remains intact, and dealers are stepping into the belly of the curve in preparation for a $44 billion 7-year Treasury auction.

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Data-driven rebound pushes US Treasury yields into positive territory, core PCE rises 3.3% year-on-year, curve compression persists

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