*** Fri's modest rate rally not......>

US TSY FUTURES: *** Fri's modest rate rally not being kind to yld curves,

currently making new 10+ year lows, 5s30s below 26.5 at the moment (after

breaking long-term support around 35.0 back on April 12). Latest:

* 2s10s -1.018, 41.772 (43.155H/41.090L);

* 2s30s -1.521, 55.867 (57.962H/55.867L);

* 5s30s -1.231, 26.458 (28.817H/26.218L);

Weighing in, BNP Paribas strategists posit a "demand-supply mismatch for longer

dated Treasuries is consistent with the recent flattening of the curve and the

increase in stripping activity." While "much of the flattening of the curve

since last year was led by an increase in Fed hikes pricing" BNP said flattening

is likely to accelerate amid increased Japanese insurance portfolio demand if

US$/Yen recedes to 104-105 lvl vs. 109.18 currently. BNP expects continued

flattening in 5s and 10s vs. 30s, while 2s10s "shouldn't invert" unless a

"faster pace of hikes" requiring "confidence about a higher r*" is priced in.

BNP doesn't "sense any pressing need for the Fed to hike faster than what is

priced in."