Bonds down slightly to give back some of Weds big rally, fives lead way lower

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•Bonds down slightly to give back some of Weds big rally, fives lead way lower
•Brisk volume, 175k 10-year futures trade by 06:24 EST
•Better selling weighs on market; Japanese accounts hit 10s, leveraged accts sell belly
•USTs underperforming EGBs by 4.7bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 2.080% and 2.052% overnight.

•The tactical bias is supportive now that the auctions are nearly complete and into month end extensions, since both real and fast money players have shown increases in short positions (JPM duration survey for real money, on run repo shorts for fast money).
•Look for a range of 2.05% to 1.97% in 10s.
•The strategic bias is flat but will look to buy 7s in the auction Thursday if levels look good.
•The curve bias favors flatteners post auctions.











•08:30 Initial Claims (wk Feb 18) (mkt 354k, prev 348k)
•08:30 Continuing Claims (wk Feb 11) (mkt 3.460 mln, prev 3.426 mln)
•10:00 FHFA House Price Index (Dec) (prev -1.8% y/y)
•11:00 Kansas City Fed Mfg Survey (Feb) (prev +7)


•10:15 Fed outright Treasury coupon sale (04/15/2014 – 02/15/2015) (e: $8.00 – 8.75 bln)


•11:00 Treasury announces 3- and 6-month bills (e: $33/31 bln)
•13:00 Treasury auctions $29 bln 7-year notes
•BoE, 3-year; BAML/Goldman Sachs International/HSBC/MS

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