The curve folded back in on itself again on Thursday, as steepeners continued to be unwound in the wake of the Fed cut and a mild consumer price index (CPI) this week.
The continued flood of issuance at the front and middle of the curve contrasting with attractive yields and shrinking supply at the long end helped drive the 2s/30s spread in 5 basis points to +150 basis points, which compares to +170 basis points wides earlier this week. The Treasury bought back $1.75 billion in bonds, which didn't hurt either, and the June and cash bonds closed at session highs after the equity rebound lost some momentum.
The 5-year notes lagged all day, amid reports of mortgage-related selling, but buyers returned after its yield bowed out to 5.0%. Data was not much to write home about, with claims easing, Philly Fed slipping and leaders rebounding slightly.
Fed speakers included Meyer and Ferguson, but the FOMC minutes proved more interesting after it was revealed that some members favored a 75-basis-point cut in March, but opted for the 50-basis-point intermeeting move on April 18, after a delay from April 11 due to market conditions. Fed loan officer survey showed banks still tightening standards.