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UST 10Y yield rose 5bp to 4.11% amid cooler PCE data at 2.8% YoY, signaling persistent inflation pressures despite Fed cut expectations holding at 75% for December. 2Y yield edged up 2bp to 3.55%, while 3Y increased 2bp to 3.53%, steepening the front-end curve as short-end rates reflect hawkish regional Fed rhetoric offset by NY Fed dovishness. IG spreads tightened 1bp to 80bp OAS, supported by $6B inflows against heavy $45B supply, though still near June wides; HY spreads held at 292bp, buoyed by low default risks and $1.1B fund flows.​

Treasuries rallied across the curve post-jobs report adding 119k jobs with unemployment at 4.4%, boosting odds of policy easing while term premium expanded on fiscal concerns. IG corporates gained 0.40% but underperformed Treasuries by -15bp due to mixed technicals; munis absorbed $14.1B supply with steady yields and $130M inflows. MBS and EM debt advanced, while senior loans dipped amid broader risk-off in preferreds.​

Outlook favors duration extension if Fed delivers cuts, with 10Y projected to 4.00% QoQ and 3.77% in 12 months, though rising term premium caps upside. Credit value persists in HY at +495bp spreads historically tight yet resilient to 2.0-2.5% GDP growth; IG offers carry but vulnerable to widening if supply persists. Portfolio tilt toward curve steepeners and selective IG/HY overweight, hedging convexity risks in volatile vol environment.