Group 1 - The U.S. Treasury market has experienced significant volatility due to concerns over fiscal outlook, with long-term Treasury bonds recording their first monthly decline since 2025 in May [1] - On June 2, Treasury yields across various maturities rose by 4 to 7 basis points, with the 10-year yield increasing over 6 basis points to nearly 4.47%, and the 30-year yield briefly surpassing 5%, driven by uncertainties surrounding Trump's tariff policies and the U.S. trade and fiscal policy outlook [1][3] - The credit default swap (CDS) spreads for U.S. Treasuries have been climbing, reaching near two-year highs, with the 5-year CDS spread approaching 50 basis points, up from about 30 basis points at the beginning of the year [3] Group 2 - Large bond investment institutions are maintaining lower overall holdings in U.S. Treasuries, favoring shorter-term bonds such as those with maturities of 5 years or less, with firms like BlackRock underweighting Treasuries and closely monitoring the impact of Trump's "beautiful plan" on the deficit [3] - The yield spread between the 5-year and 30-year Treasuries is at its lowest level since 2021, and there was a momentary inversion between the 20-year and 30-year Treasury yields [3] - Upcoming labor market reports are expected to influence Treasury yields and the Federal Reserve's interest rate trajectory, with traders currently anticipating two 25 basis point rate cuts by the Fed in 2025, down from three cuts expected in May [3]

Group 1 - Concerns over the fiscal outlook have led to a "fiscal reckoning" for U.S. Treasuries, with credit default swap (CDS) spreads rising to their highest levels in two years [1][5] - In May, U.S. Treasuries, particularly long-term bonds, experienced their first monthly decline since 2025, with yields increasing by 4 to 7 basis points on June 2 [1][3] - The rise in CDS spreads is attributed to investor worries about the U.S. government's ability to meet its debt obligations, with the 5-year CDS spread nearing 50 basis points, up from approximately 30 basis points at the beginning of the year [5][6] Group 2 - The yield curve for U.S. Treasuries has steepened, with the 10-year yield surpassing 4.47% and the 30-year yield briefly exceeding 5%, reflecting risks associated with potential trade measures from the Trump administration [3][4] - Despite the increase in long-term yields, large bond investment institutions are maintaining lower positions in Treasuries, favoring shorter maturities [3][6] - The CDS spread increase is seen as a temporary reaction by investors awaiting a new budget agreement to raise the debt ceiling, rather than an indication of an impending financial crisis or widespread default [6][7] Group 3 - The upcoming labor market reports are expected to significantly influence U.S. Treasury yields and the Federal Reserve's interest rate trajectory, with expectations for two rate cuts in 2025 [4] - The U.S. Treasury has reached its debt ceiling of $36.1 trillion, with limited borrowing capacity, raising concerns about the timing of when the government will exhaust its borrowing ability [5][6] - The passage of Trump's significant tax cut plan, estimated to increase U.S. debt by an additional $4 trillion, adds to the uncertainty surrounding fiscal policy and its impact on Treasury investments [6][7]