Bond Rally Holds Promise Amid $42B Treasury Offering

Corporate debt sales are driving bond yields higher, with a $42 billion 10-year Treasury offering requiring a concession to ease absorption after a recent rally. However, the bullish bias is expected to remain intact once the supply is absorbed.
Thin spreads and stock buybacks are likely to incentivize more companies to issue bonds, contributing to the ongoing bond market activity.
Despite today's pullback, the overall supply outlook is positive, with the US Treasury maintaining steady coupon auction sizes and initiating debt buybacks. The Fed's reduced Treasury balance sheet runoff cap also supports investor optimism for a continued rally in the bond market.