The US 5/30 year treasury yield curve has widened the most since October 2021, with the risk of Trump removing Powell unsettling bond investors.

The yield spread of the US 5/30-year Treasury bonds has increased by nearly 10 basis points to +107.895 basis points, approaching the highs of +114.492 basis points on October 6, 2021, and +166.984 basis points on February 24 of that year. Since various reports about the possible imminent dismissal of Federal Reserve Chairman Powell by US President Trump were released, the performance of the front-end and belly of the US Treasury bonds has been better than the overall market. The US Treasury yield curve has shown a significant sharp turnaround, pushing the 5-year 30-day interest rate swap curve to its widest level since 2021. Front-end rates have turned dovish, reflecting a rate cut premium of about 16 basis points at the September policy meeting, while at the close on Tuesday reflected a rate cut of 13 basis points. In addition, the swap curve has fallen to expect a loosening of about 50 basis points for the remaining time this year, compared to the previous 43 basis points. The 5-year 30-day interest rate swap spread and the 2-year 10-day interest rate swap spread each expanded by 9 basis points and 7 basis points, while the 2-year 5-year 30-day interest rate swap spread fell by about 7 basis points from the close on Tuesday.