Fixed income moves higher ahead of payrolls

Normally in the European morning session ahead of the US employment report, we note that markets have been steady. This has not been the case today with Treasuries moving above yesterday's highs while Bunds are approaching their June 21 high and gilts their June 11 high.

• June nonfarm payrolls (out Friday, 0830ET/1330BST) are seen rising by 720k (BBG median) vs +559k in May, with the range of estimates running from 400k-1050k with standard distribution of 121k. Market reaction is likely to be more pronounced on an upside beat rather than a downside miss. This is because a weaker-than-expected headline figure will probably be seen as a supply-side rather than demand-side issue, and one that's already taken into account by the Fed; on the other hand a figure of say 1mn+ could reignite concerns about an earlier rate hike liftoff.
• We also have US trade, factory orders and the final print of durable goods all due for release later today.
• TY1 futures are up 0-6 today at 132-14+ with 10y UST yields down -0.9bp at 1.450% and 2y yields up 0.3bp at 0.258%.
• Bund futures are up 0.42 today at 172.96 with 10y Bund yields down -2.5bp at -0.227% and Schatz yields down -0.5bp at -0.676%.
• Gilt futures are up 0.22 today at 128.24 with 10y yields down -2.3bp at 0.706% and 2y yields up 0.3bp at 0.065%.