With Treasury yields nearly as low as they can go and the Fed actively buying Treasuries and MBS again, rates are expected to remain rangebound which was certainly the case last month. May’s largest yield change was 12 bps on the 30-year Treasury, with all other points on the yield curve remaining within 7 bps from where they started the month. A range-bound rate environment leaves spread changes and starting yield as the main drivers of total return and May was a good month for spreads as investor sentiment turned positive with the economy gradually beginning to re-open.
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TC115195(0620)1