TREASURY WRAP: T-NOTE FUTURES (Z6) SETTLE 4+ TICKS LOWER AT 104-07

Yield curve bear steepens as long end leads yields higher. At settlement, 2-year +0.4bps at 4.831%, 3-year +0.2bps at 4.959%, 5-year +0.9bps at 5.063%, 7-year +2.3bps at 5.186%, 10-year +3.2bps at 5.307%, 20-year +3.9bps at 5.709%, 30-year +3.8bps at 5.661%. THE DAY: Treasury yields continued to move higher on Monday, with the curve bear steepening as the long end led the move. There was no Fed speak to digest, while US data saw a mixed ISM Services PMI report. The headline declined M/M to marginally below expectations, with Business Activity and New Orders both falling sharply, indicating slower activity growth than in August. Conversely, Prices accelerated further and Employment returned to expansionary territory. The data ultimately had little impact on Treasury price action. The moves largely continued Friday's reversal despite the soft NFP report. Meanwhile, oil prices settled in the red, albeit after choppy trade, which may have helped keep the front end of the curve relatively anchored. More broadly, the price action extends the trend seen over recent months, with Treasury yields continuing to climb and the move accelerating since September amid renewed upside in oil prices, the resumption of Fed rate hikes and persistent global fiscal concerns. The AI investment boom has also remained a potential source of pressure through expectations for stronger investment and growth, alongside the significant financing needs associated with the buildout. Overall, there was no obvious fresh catalyst behind Monday's price action, with the move instead appearing to reflect a continuation of the broader trend seen in recent months. Supply Notes US to sell USD 58bln 3yr notes on October 6th, USD 39bln 10yr notes on October 7th; and USD 22bln 30 year bonds on October 8th; all to settle on October 15th Bills * US sold 6-month bills at a high rate of 4.165%, B/C 2.79x; sold 3-month bills at a high rate of 4.050%, B/C 2.51x * US to sell USD 95bln of 6-week bills on October 6th; all to settle on October 8th STIRS / OPERATIONS Fed Hike Pricing via CME FedWatch: Oct 6.0bps (prev. 5.7bps), Dec 27.1bps (prev. 25.9bps) EFFR at 3.88% (prev. 3.88%), volumes at USD 118bln (prev. USD 120bln) on October 2nd SOFR at 3.88% (prev. 3.87%), volumes at USD 3.013tln (prev. USD 3.067tln) on October 2nd NY Fed RRP op demand at 1.00bln (prev. 1.50bln) across 6 counterparties (prev. 3) on October 5th US Treasury to buy back up to USD 4bln of 2-3 year notes on October 6th (as expected)