Long Bond Outperforms Again

More corporate supply and the upcoming quarterly refunding weighed on shorter-dated issues

The curve flattened Wednesday, as the front-end and belly of the curve underperformed the Phoenix-like long-end. The 2s/30s spread narrowed from the +150 basis points area to +145 bp, with more corporate supply and the quarterly refunding next week crowding the shorter maturities while the long-end benefitted from Treasury commitment to more bond buybacks. In fact, a stepped-up buyback of $10 billion was announced for Q2, followed by another $10 billion in Q3, which combined with a $470 million Fed coupon pass in the longer dates tripped buy-stops on the June bond through 101-11 Tuesday highs.

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