Treasury Futures Finish Lower, Curve Steeper

Treasuries saw a modest sell-off on Wednesday, majority of the weakness came during the Asian and European session, tsys futures traded higher after surprisingly soft wholesale trade sales (-1.3% M/M in Mar vs cons +0.8%) were released early in the US session before then erasing gains, while the 10Y auction tailed by 1bp although it was digested relatively well, helped by internals keeping to recent ranges, including lowest dealer and highest indirect takes since Feb.

• Treasury futures closed the day at intraday lows, with the 10Y contract down (-0-06) to 108-26+, while the 2Y contract performed slightly better post the Asian session to finish the day down (-0-00⅞) at 101-22.
• Treasuries maintain a firmer tone and are holding on to the bulk of their recent gains. Initial resistance is 109-06+/08+ (Channel top from Feb 1 high / 50-day EMA), while to the downside, initial support is at 108-15+ (20-day EMA).
• Cash Treasury curve bear-steepened on Wednesday, yields were 0.5-4.5bps higher, with the 2Y yield +0.6bp at 4.837%, 10Y +3.7bps to 4.494%, while the 2y10y +3.061 at -34.489
• Looking Ahead: Weekly jobless claims data, 30Y supply (after April saw the first tail since November) and then SF Fed’s Daly speaks