Cash Treasuries were welcomed.......>

US TSYS SUMMARY: Cash Treasuries were welcomed back from their holiday with a

bearish steepening of the curve - a steepening that extends up to the 30Y tenor

where the yield has lifted 2.6bp. The 10Y is 2.5bp higher at 2.344%

- EGB markets have weakened as a result of strong German IFO that hit an

all-time high for the indicator. However, it was the semi-core where selling was

seen early on.

- What flows seen in the USD swap market have been steepeners: 3-5Y and 5-10Y

and there was also a 3-4-5Y fly that paid the belly in around 150k DV01.

Outright trades have been dominated by receiving.

- Today sees a recommended early close (2pm EST) for debt markets and clearly is

thinly traded. 

- The data calendar is limited to US Markit PMI. It is looking as if next week

will be heavy in terms of corporate issuance and there are 2Y, 5Y and 7Y UST

auctions next week. However, setting up today is unlikely but the 5Y EURUSD

cross currency basis swap is pushing northwards, perhaps anticipating Yankees.

- Note that the 10Y UST headline spread is at 0bp today.