Bonds marginally bid in very quiet trading before employment report

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•Bonds marginally bid in very quiet trading before employment report
•Volume moderately light; 113k 10-year futures trade by 06:22 EST
•USTs outperforming EGBs by 0.6bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 2.023% and 2.010% overnight.


•The tactical bias is defensive, sensing the better potential is for a downside break than not given the improving backdrop, expensive valuations and the approach of supply.
•Look for a 2.13% to 1.95% range in 10s with a strength-selling bias.
•The strategic bias covered a 50% position in 10s from 1.965% at 1.995% for a 3 bps profit.
•The curve bias is flat, but favors owning the belly of 7s and 10s versus the wings of 2s and 30s in light of the QE-MBS trial balloon by the Fed via the WSJ’s Jon Hilsenrath. We will look to enter a 10s/30s steepener at 114 bps if hit.











•08:30 Nonfarm Payrolls (Feb) (mkt +210k, prev +243k)
•08:30 Private Payrolls (Feb) (mkt +225k, prev +257k)
•08:30 Manufacturing Payrolls (Feb) (mkt +25k, prev +50k)
•08:30 Unemployment Rate (Feb) (mkt 8.3%, prev 8.3%)
•08:30 Average Hourly Earnings (Feb) (mkt +0.2% m/m, prev +0.2% m/m)
•08:30 Workweek (Feb) (mkt 34.5 hrs, prev 34.5 hrs)
•08:30 International Trade (Jan) (mkt -$49.0 bln, prev -$48.8 bln)
•10:00 Wholesale Inventories (Jan) (mkt +0.6% m/m, prev +1.0% m/m)
•10:00 Wholesale Sales (Jan) (mkt +0.8% m/m, prev +1.3% m/m)


•10:15 Fed outright Treasury coupon sale (08/15/2013 – 01/31/2014) (e: $8.00-8.75 bln)

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