Treasury yield spreads continued tightening after a brief pause as the world remained focused on the outbreak of the Wuhan coronavirus in China and the sharp growth in cases in South Korea. The 2s10s spread narrowed by five basis points to 12 bps while the 2s30s spread tightened by six basis points to 56 bps. The spread between the 3-month bill yield and the 10-yr note yield narrowed by ten basis points to -9 bps.

Corporate spreads widened after narrowing last week. The high yield spread widened by 12 bps to 439 bps while the investment grade spread expanded by five basis points to 90 bps.

The yield spread between Germany's 10-yr bund and the U.S. Treasury 10-yr note increased by ten basis points to -190 bps.

The 5y5y forward rate fell six basis points to 1.62%, marking a fresh cycle low. The inflation gauge indicates that the market is not seeing a risk of an inflationary spike.

Rate cut expectations were brought forward during the past week. The fed funds futures market now sees a 75.2% implied likelihood of a rate cut in June while the implied likelihood of a cut in July jumped to 85.1% from 60.2% one week ago.