Retracing Post-ISM Gains

Global core FI futures are trading near session lows with steady weakness seen through European morning trade Tuesday. Treasuries have faded about half of the gains made after Monday's weak ISM print.

• Bellies are underperforming on the US and German curve, with UK 10s weakest.
• With futures volumes relatively limited, price action so far has mostly been eclipsed by cross-asset moves, with yields rising on sharp moves lower in the dollar vs G10 counterparts, and higher equities.
• Indeed despite the belly underperformance (DE/US 5Y yields up 4-5bp vs 4bp in 2s and 10s), not much change in central bank hike expectations: ECB/BoE/Fed terminal rates each up around 1bp.
• Data hasn't had much of an impact this morning (EU PPI was in line; ECB's consumer survey saw inflation expectations dip slightly).
• An appearance by BoE's Pill will be eyed later, while the key US releases are JOLTS and Factory Orders (out simultaneously at 1000ET).
• We also hear from the FOMC's Cook, Collins and Mester.

Latest levels:

• Jun US 10Y futures (TY) down 5/32 at 115-09.5 (L: 115-08 / H: 115-20)
• Jun Bund futures (RX) down 71 ticks at 135.87 (L: 135.81 / H: 136.59)
• Jun Gilt futures (G) down 92 ticks at 103.71 (L: 103.64 / H: 104.43)
• Italy / German 10-Yr spread 0.4bps wider at 185bps