Mixed flows in quiet trading leave bonds little changed overnight

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OVERNIGHT TREASURIES

•Mixed flows in quiet trading leave bonds little changed overnight
•Slim outright volume as calendar roll continues to dominate; 176k March 10s trade against 121k June
•Better buying shorter dated paper to fives from Japan/Asia set against bits of selling around curve from Japan/Asia
•USTs underperforming EGBs by 0.7bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 1.939% and 1.924% overnight.

MARKET BIAS

•The tactical bias remains supportive with another 10 and then 30-year Fed buyback over the next two days plus month end extensions/pension fund rebalancing into Wednesday.
•Look for a range of 1.95% to 1.88% in 10s.
•The strategic bias is flat.
•The curve bias continues to favor flatteners.

TECHNICAL OVERVIEW

 

 

 

 

 

 

 

 

DATA

•07:45 ICSC/GS Chain Store Sales Index (wk Feb 25) (prev +3.2% y/y)
•08:30 Durable Goods (Jan) (mkt -1.0% m/m, prev +3.0% m/m)
•08:30 Durable Goods ex-Trans (Jan) (mkt 0.0% m/m, prev +2.2% m/m)
•08:30 Nondefense Capital Goods ex-Air (Jan) (mkt +0.4% m/m, prev +3.1% m/m)
•08:55 Redbook Same Store Sales Index (wk Feb 25) (prev +2.9% y/y)
•09:00 S&P/Case-Shiller Index (Dec) (mkt -3.6% y/y, prev -3.7% y/y)
•10:00 Consumer Confidence (Feb) (mkt 63.0, prev 61.1)
•10:00 Richmond Fed Surveys (Feb) (prev mfg +12, svcs revenues +18)

EVENTS

•10:00 Fed Governor Duke (voter, dove) on housing
•10:15 Fed outright Treasury coupon purchase (05/15/2020 – 02/15/2022) (e: $4.25 – 5.00 bln)
•19:15 FRB Cleveland’s Pianalto (voter, moderate) on national and regional prospects

ISSUANCE

•11:30 Treasury auctions $40 bln 4-week bills and $20 bln 49-day CMBs

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