Market Roundup: Unexpected Short Term Volatility, Bonds Off Highs

Some unexpected volatility for Bonds this morning - back to opening levels after extending post-data highs after Core durable goods orders a touch softer than expected in April, rising +0.3% M/M (cons +0.5) after a downward revised +1.1% M/M in March (originally +1.3).

• No obvious headline driver or sizable block prints to explain the reversal after USM2 tapped 142-22 high (30YY2.9213L).
• Yield curves rebounding off broadly flatter levels: 2s10s -2.897 at 23.669 vs. 21.365 recent low.
• Surge in Tsy volumes not data related but tied to Jun/Sep roll, currently over 50% ahead May 31 First Notice (Sep takes lead quarterly position).
• US 10Y technicals: TYM2 contract has breached resistance at 120-10 (May 19 high) yesterday, currently 120-21.5 (+9.5) vs. 120-26 post-data high.
• Move improves the current short-term bullish condition and signals scope for a continuation higher. Key near-term resistance focus is on 120-28+, the 50-day EMA. Short-term gains are still considered corrective.
• Flipside: key support and the bear trigger is 117-08+, May 9 low. Initial firm support has been defined at 118-16, May 18 low.