U.S. Treasury notes experienced a modest decline on Wednesday, remaining under pressure for the majority of the U.S. trading session. Downward pressure stemmed from significant block sales in both classic Treasury futures and ultra-long bond futures. Medium-term maturities were particularly affected by a disappointing 5-year note auction, where the high yield came in 0.7 basis points above the level seen in pre-issuance trading.

Shortly after 3 p.m. in New York, yields had climbed across the curve by 1 to 2.5 basis points, with intermediate-term bonds leading the losses. However, the curve's earlier flattening trend was partially reversed as spreads narrowed following the late-session block sales in the futures market.

Yields on intermediate bonds edged higher after the $70 billion 5-year note auction concluded at 1 p.m., pushing the spread between 5-year and 30-year yields to its lowest point for the day. Primary dealers were allotted 12.8% of the issue, the highest share since March 2025. The portion awarded to direct bidders fell to 24.7%, while the allocation to indirect bidders increased to 62.5%.

Short-dated bonds weakened during the early U.S. session, partly due to several large block trades in SOFR futures expiring in September 2026 and June 2026.

As of 3:58 p.m. Eastern Time, the respective yields were as follows: - 2-year Treasury yield: 3.4689% - 5-year Treasury yield: 3.6187% - 10-year Treasury yield: 4.048% - 30-year Treasury yield: 4.6923% - The yield spread between 2-year and 10-year notes stood at 57.71 basis points. - The yield spread between 5-year and 30-year notes was 107.19 basis points.