A stabilization of economic data provided some relief for the bond market in May. The 10-year Treasury yield fell 18 basis points, ending the month at 4.48%, while the shape of the curve was relatively flat month over month. The shift in rates followed a moderation in the strong labor and inflation data we saw in recent months.

The Treasury rally was partly driven by the FOMC meeting and commentary, where the Fed left rates unchanged as expected. Chair Powell stated the need for “greater confidence” on inflation before cutting rates, as “there [has] been a lack of further progress toward the committee’s 2 percent inflation objective.”

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