Market Roundup: Scaling Back

FI futures trading firmer, just off recent highs on moderate volumes (TYM2>630k), yield curves flatter (2s10s -2.45 at 30.78) with short end lagging despite recent block buying in 5s. No obvious headline trigger, Tsys broke upside range appr 15 minutes after equity open (ESM2 weaker but off lows at 4007.25) appeared to be accts scaling back risk-on positioning from last Friday.

• Little react to morning data (NY Empire mfg index -11.6, new orders -8.8) with two-way trade/inside range by midmorning. Nothing really new from NY Fed Williams espousing 50bp hikes next couple meetings, comment "WE DON'T KNOW EXACTLY HOW LONG INFLATION WILL STAY HIGH" not exactly confidence inspiring.
  
• Large slate of Fed speakers on Tuesday: Bullard, Harker, Kashkari, Powell, Mester and Evans.
• Short end weaker while levels adjust lower (again) out the curve to reflect hawkish policy to combat inflation.
• US 10Y technicals: Primary downtrend in Treasuries remains intact, however, a corrective (bullish) cycle established last week remains in play, suggesting potential for short-term gains.
  
• The contract has traded above the 20-day EMA and this opens 120-18+, the Apr 27 high. This level represents an important short-term resistance where a break would signal scope for a stronger retracement. On the flipside: Key support and the bear trigger is unchanged at 117-08+.