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Following EGBs Lower With TY In Retracement Mode

US TSYS
  • Treasuries have followed EGBs lower in a reversal of the earlier unwinding of political risk premium that had been priced in ahead of Sunday’s French election (first round in line with expectations).
  • ISM manufacturing provides today’s focal point before Chair Powell tomorrow.
  • Cash yields sit between 0.5bp lower (2s) and 1bps higher (7s and beyond) with the further steepening seen with the Asia open.
  • 10Y yields hold just above 4.40% at levels shortly prior to the May CPI report (Jun 12) whilst 2s10s at -34.1bps continues its lift away from recent ytd lows of -50.8bps.
  • TYU4 is in retracement mode, currently at 109-18+ off an earlier low of 109-15 with particularly elevated volumes of 475k. The earlier low marks initial support after which lies the key 109-00+ (Jun 10 low).
  • Data: S&P Global US mfg PMI Jun final (0945ET), ISM mfg Jun (1000ET), Construction spending May (1000ET)
  • Bill issuance: US Tsy $73B 13W, $70B 26W bill auctions (1130ET)

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