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Treasuries Cheapen Ahead Of A Light Docket

US TSYS
  • Cash Tsys have steadily cheapened through both Asian and European sessions but outperform core Europe where yields have increased to new cycle highs ahead of tomorrow’s ECB rate decision.
  • Today’s milder bear steepening comes after yesterday’s sizeable bull flattening (partly on growth fears, as evidenced by the Atlanta Fed GDP tracker falling below 1% annualized in Q2). This sees front end yields back near recent highs whilst the rest of the major benchmark tenors are off highs but sit above 3% across the curve.
  • 2YY +2.3bps at 2.749%, 5YY +3.3bps at 3.018%, 10YY +4.2bps at 3.016%, 30YY +3.8bps at 3.161%.
  • TYU2 trade 10 ticks lower at 118-03+ but well within ranges of the past two days, with average volumes. Yesterday’s low of 117-22+ forms initial support after which it could ultimately open a bear trigger at 116-21 (May 9 low).
  • Bond issuance: US Tsy $33B 10Y note CMB auction (91282CEP2) – 1300ET
  • Bill issuance: US Tsy $30B 119D bill auction – 1130ET
  • Data limited to weekly MBA mortgage applications plus wholesale finalised inventories and sales for April.

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