BONDS: EGBs-GILTS CASH CLOSE: Peace Optimism Aids Bull Steepening

The United States Senate has voted 49-50 to block a Democratic-led war powers resolution to rein in the Trump administration's authority to direct military operations against Iran for a seventh time. The vote is the first since the conflict passed the 60-day point on May 1, seen by many as the maximum threshold for an administration to wage war without Congressional authorisation.

• Republican Senators Susan Collins (R-ME), Rand Paul (R-KY), and (for the first time) Lisa Murkowski (R-AK) voted in favour of the resolution. Senators John Curtis (R-UT) and Thom Tillis (R-NC) voted no, despite some reporting that they could switch their votes after the 60-day mark. Democrat John Fetterman (D-PA) voted no, providing a swing vote for the GOP.
• While Democrats gained a vote, the lack of substantial Republican defections keeps the pressure off the Trump administration as it continues back-channel negotiations with Iran to resolve the conflict.
• Senate Majority Leader John Thune (R-SD) said ahead of the vote, "I think right now the president's overseas. He's negotiating with the Chinese on a whole range of issues, some of which bear on national security. And I think it would be best if everybody hung together in support of the president, but we'll see. I think there's - people have their own minds about some of these issues."
• Note: The White House argues that such war powers resolutions are unconstitutional and that the conflict has been frozen since a ceasefire took effect in April, effectively halting the clock on Congressional oversight. Moreover, President Donald Trump can veto any measure that fails to achieve a supermajority.

• +23,000 TYM6 109-30, buy through 109-29.5 post time offer at 1209:01ET, DV01 $1.47M
• The 10Y contract trades 110-03 last (+2)

Tsy futures trade modestly weaker ahead of the $25B 30Y Bond auction (912810UU0) at 1300ET. WI currently running around 5.044%, 17.3bp cheap to last month's stop. Today's results will be available shortly after the competitive auctions closes at 1300ET.

• April auction recap: Treasury futures off session lows (USM6 -8 at 114-17) after the $22B 30Y auction re-open (912810UR7) stopped through: 4.871% high yield vs. 4.878% WI; bid-to-cover at 2.45x vs. 2.66x prior.
  • Peripheral measures: indirect take-up receded to 63.41% vs. 69.94% prior; direct bidder take-up rose to 27.23% vs. 24.18% prior; while primary dealer take-up rises to 9.36% vs. 5.88% prior.