Risk-Off Rally Ahead Of PMIs

Treasuries are slightly off overnight highs but comfortably stronger overall in European morning trade Friday.

• Weak flash June PMIs in Europe, which also showed signs of price pressures easing, spurred bull flattening in Bunds and Gilts, leading to a similar move in the Treasury curve.
• With global growth concerns regaining ground, the broader picture is risk-off, with S&P futures reversing Thursday's gains and the US dollar index +0.5%.
• US 2s10s are comfortably through -100bp, with March's -111bp post-1980 low in sight.
• Prelim PMIs are the highlight of the US calendar at 0945ET, followed by KC Fed Services at 1100ET.
• The only scheduled FOMC speaker is Cleveland's Mester (1340ET, with text).
• There is no Treasury supply today.

• The 2-Yr yield is down 3.5bps at 4.7563%, 5-Yr is down 5.3bps at 3.9892%, 10-Yr is down 5.4bps at 3.7405%, and 30-Yr is down 4.4bps at 3.825%.
• Sep 10-Yr futures (TY) up 12/32 at 113-3.5 (L: 112-22 / H: 113-7)