Tsys Underperform Following Wednesday's "Skip" Higher

The US curve is bear flattening in European morning trade Thursday as some of Wednesday's rally is unwound. Treasuries are underperforming Bunds and Gilts whose respective curves are likewise leaning bear flatter.

• The Tsy cheapening this morning has continued the partial reversal from the dovish front-end repricing after Fed Gov Jefferson and Philly's Harker pointed yesterday to a potential "skip" of a June hike. Harker appears again today and is the only scheduled Fed speaker through the rest of the pre-Blackout period.
• Data so far has been relatively uneventful: we got modest mixed revisions of final European manufacturing PMIs, while the Eurozone prelim May CPI confirmed the national readings' slowing % Y/Y core and headline pressures. We saw an uptick in inflation expectations in the latest BoE DMP survey, but not a big Gilt mover.
• We get the accounts of the May ECB meeting and appearances by Lagarde and Villeroy.
• Major data includes US ISM Manufacturing, jobless claims and construction spending, with final Manufacturing PMI as well. Second-tier jobs data (ADP Private Payrolls, Challenger Job Cuts) will get attention ahead of Friday's nonfarms.

Latest levels:

• Sep US 10Y futures (TY) down 11/32 at 114-4 (L: 114-01 / H: 114-16)
• Jun Bund futures (RX) down 33 ticks at 135.72 (L: 135.6 / H: 136.17)
• Sep Gilt futures (G) down 22 ticks at 96.57 (L: 96.34 / H: 96.74)
• Jun OAT futures (OA) down 34 ticks at 130.2 (L: 130.1 / H: 130.65)