Choppy trade in the first half for.....>

US TSY FLOWS: Choppy trade in the first half for rates with Tsys trading close

to session lows after the closing bell. Yld curves at new 3Y highs amid better

selling w/accts off sidelines ahead of Fri's headline May employment data. USD

stronger for first time in a couple weeks, equity off lows late (ESM0 -7.0

around 3110.7). 

- Little react to weekly claims (1.877M) but a lot of unwinds and open interest

declining last couple sessions. Knock-on selling in EGBs, GGBs spilled over to

Tsys; likelihood of more stimulus weighing. 

- Contributing to latest directional bear steepening as 10Y broke appr 2M range:

1) Exp of yld curve control probably in short end within next five years

(Mester). 2) Rebound in equities (no V or sideways L, more like the Nike swish

logo) evaporates buying riskless long-end assets. 3) Mild) increase in infln

expns: ULC 5.1%, UofM exps, rising oil. 4) one desk suggests Tiananmen Sq anniv

"is center of a lot of long end callable..move is global." 

- The 2-Yr yield is up 0.2bps at 0.192%, 5-Yr is up 3.3bps at 0.3989%, 10-Yr is

up 6.4bps at 0.8102%, and 30-Yr is up 8bps at 1.6109%.