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Chipping Away At Friday’s Rally

US EURODLR FUTURES
  • An unsurprisingly quiet session with the US holiday, with only 41k of EDZ2 traded at the time of writing.
  • Yields firmed through the white and red packs through European hours (led by EDH3 +4.5bps), with the mood set by a sharp reversal of Friday’s rally in European sovereign bonds despite few headline drivers aside late on ECB’s De Guindos leaning heavily on a 25bp hike in July.
  • Front contract yields are back higher than just prior to the ISM manufacturing miss whilst the curve remains heavily inverted thereafter, peaking at 3.70% in EDZ2 before 11bps of cuts through EDZ2/EDH3 and 75bps of cuts through EDZ2/EDZ3
  • Tomorrow sees a slow start to the US week with factory orders before picking up with the service PMI and FOMC minutes plus NY Fed’s Williams speaking on Wednesday.

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