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Cheaper With ISM Services Eyed, Heavy Bill Issuance

  • Cash Tsys trade cheaper having generally trended lower through Asian and European hours, buoyed by an initial cheapening burst in EGBs around the old Eurex futures open. Macro headline flow has been a little limited, save the mark lower in the final Eurozone services PMI (to a still more than healthy 55.1).
  • ISM Services headlines the docket, with likely added attention on price components after Thursday’s manufacturing report showed an as expected headline figure but a sharp decline in prices paid. Elsewhere, heavy bill issuance is on the cards.
  • 2YY +5.0bp at 4.547%, 5YY +5.3bp at 3.896%, 10YY +5.2bp at 3.743% and 30YY +4.1bp at 3.928%.
  • TYU3 trades 13 ticks lower at 113-14 just off lows of 113-12+ on average volumes of 270k. Post payrolls price action saw it clear support at 114-00 (May 31 low) to open a key support at 112-29+ (May 26/30 low).
  • Data: S&P Global Service/Composite PMI May final (0945ET), ISM Services May (1000ET), Factory orders Apr (1000ET)
  • Fedspeak: Mester welcome remarks at 1330ET but blackout period
  • Bill issuance: US Tsy $65B 13W, $58B 26W (1130ET), US Tsy $50B 44D CMB auction (1300ET)

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