Directional Moves. US Treasuries sold off across the curve in May 2026, with the bear-flattening bias most pronounced in the belly. The 10-year benchmark closed the month at 4.45%, five basis points higher than April's 4.40% close, after trading an intramonth range of 31 basis points between 4.36% and 4.67%. The 2-year added 10 basis points to 3.98% and the 5-year rose 11 basis points to 4.13%, while the long end barely budged — the 30-year ended at 4.99%, a single basis point higher on the month. The directional tone was set mid-month, when 10-year yields punched to the 4.67% high before retracing roughly 20 basis points into month-end as duration buyers stepped back in.

Curve Moves. The curve flattened materially in May, undoing some of the steepening that had defined the prior quarter. 2s10s tightened from +52 basis points to +47 basis points, while 5s30s compressed more aggressively from +96 basis points to +86 basis points as the belly cheapened against both wings. The 3M/10Y spread moved in the opposite direction, widening from +72 basis points to +76 basis points as the very front end stayed anchored — the 3-month rose just one basis point to 3.69% in a tight five-basis-point range. The dynamic was textbook: the belly absorbed the brunt of the inflation repricing while the long end held, suggesting investors marked down near-term cut probability without revising the terminal rate higher.

Market Drivers. The selloff was driven primarily by the April CPI release on 13 May, which printed at 3.8% year-over-year against a 3.7% consensus, with core at 2.8% versus 2.7% expected — energy was the standout, with the headline component up 17.9% year-over-year. The 10-year jumped 12 basis points on 15 May to 4.59% as the print, combined with a hot PPI reading the same week, pushed CME-implied cut probability through year-end close to zero. The 29 April FOMC decision continued to weigh on the front end into May, with the Committee holding rates and recording four dissents — the most since 1992 — split between Governor Miran, who wanted a 25 basis point cut, and regional presidents Hammack, Kashkari and Logan, who objected to the statement's easing bias. Treasury's quarterly refunding, announced ahead of the 11–13 May auctions of $58bn 3-year, $42bn 10-year and $25bn 30-year, kept supply concerns live but cleared without notable concession. The peak in yields on 19 May at 4.67% coincided with fiscal headlines around debt-service costs running second only to Social Security; the subsequent rally into month-end, including the 10 basis point drop on 20 May, reflected position-squaring rather than any softening in the data. Markets exited May pricing a meaningfully shallower cutting path than they had entering the month.