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Strong Rebound Yld Curves

US TSYS SUMMARY

Yield curves bounced, making new session highs (5s30s 151.036) latter half of Monday trade as duration selling in long end extends new session lows in bonds. Levels nowhere near Thursday's post 7Y auction indigestion when 30YY hit 2.3944% high (currently 2.2183%) levels closer to Fri's midrange.

  • Technicals: TYM currently 133-05 +14/32 vs. 133-00 low, well above first support of 132-08, second support 131-31 Feb 25 Low and bear trigger.
  • Early support in rates evaporated in lead up to early data (Jan const spend +1.7%; ISM Feb Mfg PMI 60.8 vs Jan 58.7) extended duration sale on release, better selling in 10s-30s with some prop, real$ and central bank selling in 10s-30s floowed, misc acct selling 5s-7s.
  • Tsys jump-bid on Fed Gov Brainard comments, notably: BRAINARD: VALUATIONS ELEVATED IN A NUMBER OF ASSET CLASSES, Bbg, fast$ and algo-driven buying.
  • Decent pick-up in swappable corporate issuance: $23.55B To Price Monday, $7B GS 6pt jumbo adds to $5.5B issued on Jan 20. Deal-tied paying evident in 10s-30s, payers in 20s second half.
  • Sporadic real$ and central bank selling in 10s-30s after better selling from same in first half, generally cautious positioning as new month gets underway and Feb employment this Friday.
  • The 2-Yr yield is down 0.4bps at 0.123%, 5-Yr is down 1.6bps at 0.7153%, 10-Yr is up 4.5bps at 1.4496%, and 30-Yr is up 7.5bps at 2.2266%.

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