Bond Market - February 25, 2026 (Morning)

 ## Rates & Yields Overview Treasury yields are showing modest declines across the curve heading into today’s session. The 2-year Treasury yield is slightly lower, reflecting cautious investor positioning amid mixed economic signals. The 10-year yield has also edged down, while the 30-year yield shows a minor pullback. This movement suggests a subtle flattening of the yield curve overnight, with short-term rates holding firm relative to longer maturities. The flattening dynamic is driven by a combination of factors. Recent economic data have been mixed, with some signs of slowing inflation but persistent resilience in labor markets. This has kept Fed rate hike expectations steady, limiting steepening pressure. Additionally, global flows remain supportive of U.S. Treasuries as geopolitical uncertainties and cautious risk sentiment encourage safe-haven demand. Overall, fixed income sentiment is cautiously constructive, with investors balancing inflation concerns against growth uncertainties. ## Fed Watch No new Federal Reserve comments or signals were released overnight. Market expectations remain anchored for the Fed to maintain the current policy stance at the upcoming FOMC meeting scheduled for early March. The dot plot is expected to show little change, reflecting a pause in rate hikes as the Fed assesses incoming data. No Fed speakers are scheduled for today, leaving markets to digest existing guidance and economic releases. ## Bond Market Movers Pre-market bond ETF action shows minor price declines in key Treasury ETFs, consistent with the slight yield upticks. The 20+ year Treasury ETF, **$TLT**, is down marginally to $89.86 from $89.90, reflecting modest selling pressure in long-duration Treasuries amid ongoing inflation vigilance. The 7-10 year Treasury ETF, **$IEF**, also declined to $97.25 from $97.42, indicating some flattening pressure in the belly of the curve. The 1-3 year Treasury ETF, **$SHY**, is essentially flat at $83.05, as short-term rates remain anchored by Fed policy expectations. Inflation-protected securities ETF, **$TIP**, is slightly up to $111.41 from $111.31, signaling stable inflation expectations. The broad aggregate bond market ETF, **$AGG**, is down slightly to $101.04 from $101.09, reflecting modest risk-off positioning but no major dislocations. ## Credit Spreads & Risk Credit markets show mixed signals. High yield ETFs **$HYG** and **$JNK** are marginally higher, up 0.14% and 0.17% respectively, indicating modest risk appetite and spread tightening in speculative-grade bonds. Investment grade ETF **$LQD** is slightly down by 0.03%, suggesting some caution among higher-quality corporate bonds. Overall, credit spreads are stable to slightly tighter, supported by steady corporate earnings and manageable default outlooks. No notable corporate bond issuance was reported pre-market. ## Inflation & Data Watch No major inflation or employment data releases are scheduled for today. Market focus remains on upcoming CPI and PCE reports later this week, which will be critical for shaping rate expectations. Inflation expectations remain anchored, as reflected by the steady **$TIP** ETF price. The Treasury auction calendar includes regular coupon supply but no large or unusual auctions are expected to disrupt market dynamics. ## Rate-Sensitive Plays Rate-sensitive sectors are showing mixed performance. Real Estate ETF **$XLRE** declined 0.66% to $43.44, pressured by the slight rise in longer-term yields which weigh on REIT valuations. Utilities ETF **$XLU** gained 0.40% to $47.39, benefiting from its defensive yield proxy status amid cautious risk sentiment. Bank stocks such as **$JPM**, **$GS**, and **$BAC** are data not available for pre-market moves, but the outlook for net interest margins remains positive given the current rate environment. The modest flattening of the curve may limit margin expansion potential, but steady short-term rates support earnings. Growth versus value rotation appears to favor growth, supported by the Nasdaq 100’s 1.10% gain, reflecting investor preference for rate-sensitive growth sectors amid stable Fed expectations. The U.S. dollar ETF **$UUP** is slightly down to $27.08, while gold ETF **$GLD** is marginally higher at $475.15, indicating mild safe-haven demand and inflation hedging. ## What to Watch Today - Treasury coupon auctions scheduled; demand expected to be stable. - No Fed speakers on the calendar; focus on economic data and corporate earnings. - Key yield levels: watch 10-year Treasury yield for signs of curve steepening or further flattening. - Rate-sensitive equity catalysts include upcoming earnings from banks and REITs. - Market sentiment ahead of Nvidia and Salesforce earnings, which could influence risk appetite and fixed income flows.