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Bond Bear Reprieve

Bond bears see some relief from the week's rally back to mid-February levels, 10Y futures rejecting a bull channel top, 10YY off 200DMA. No data to speak of: US MAY WHOLESALE INV 1.3%; SALES 0.8%.
  • Rates trade near late session lows after the bell with equities near highs as the week's risk-off tone ebbed: not that any single factor behind the week's rally had really changed -- Covid-19 Delta variant remains as much a concern as ever, Asia market slow-down, fading stimulus tail winds, etc.
  • Parallel with technicals, traders posited markets had come too far/too fast after return from extended holiday weekend. Return of Tsy coupon supply early next week contributing to sell pressure (3s and 10Y re-open on Monday, 30Y on Tuesday).
  • Focus also on "big-6" bank earnings next week: JPM and GS Tuesday, BoAML, Citi and Wells Fargo Wednesday, MS Thursday.
  • Option traders reported continued interest in buying downside puts, hedging for modest rate hike positioning in mid 2023-2024.
  • The 2-Yr yield is up 2bps at 0.2146%, 5-Yr is up 4.5bps at 0.7866%, 10-Yr is up 6.3bps at 1.3561%, and 30-Yr is up 5.7bps at 1.9836%.

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