Then it became a slow grind lower ahead of the $25 billion two-year note auction when, strangely, a concession appeared to be priced into long-end rather than short. Remarks from Philly Fed's Santomero saying it was too early to make a judgement on the policy stance and the economy needed time to evolve echoed the dovish tone of his peers McTeer and McDonough. This helped two-year notes firm after the as-expected auction results and prompted the two-year note and 30-year bond curve to steepen out another five basis points to 216 basis points.
June bonds closed up a tick at 99-1/32, while the cash curve was 5/32 under water on the bond and up 2/32 on two-year notes. Low volumes were spread across the asset markets.