Bonds crushed again overnight amid big volume, 274k 10-year futures trade by 06:26 EST

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OVERNIGHT TREASURIES

•Bonds crushed again overnight amid big volume, 274k 10-year futures trade by 06:26 EST
•Fast money blows market away, futures lead price action, stop selling adds to pressure
•Curve steepens as long-end leads way down
•Asian/European accounts sell longer dated paper from 10s on out
•Overseas accounts lift belly, including spread product, out of Tokyo open and then again into London slide
•Better buying from Japan into weakness, front-end and 10s, some extension trades.

MARKET BIAS

•The tactical bias is defensive, looking to fade strength into the week’s auction supply to then likely cover in and move to the long side coming out of the bond auction.
•Look for a 2.22% to 2.15% range in 10s with a strength-selling bias. We will look to be a scaled out seller of the WI 30-year into this afternoon’s auction starting at 3.34%.
•The strategic bias is long a 50% position in WI 10s at 2.076% from the auction after covering a 100% short from 2.073% at 2.076% at auction for a 0.3 bps profit.
•The curve bias is flat.

TECHNICAL OVERVIEW

 

 

 

 

 

 

 

 

 

DATA

•07:00 MBA Mortgage Purchase Applications Index (wk Mar 9) (prev +2.1% w/w)
•08:30 Current Account (Q4) (mkt -$114.2 bln, prev -$110.3 bln)
•08:30 Import Prices (Feb) (mkt +0.6% m/m, prev +0.3% m/m)

EVENTS

•10:15 Fed outright TIPS purchase (07/15/2018 – 02/15/2042) (e: $1.00-1.50 bln)

ISSUANCE

•Fannie Mae benchmark note announcement
•13:00 Treasury auctions $13 bln 30-year bonds
•EBRD. $250m tap 1% 5-year; DB/HSBC
•BNG, 3-yr bmk; BAML/BC/CITI/RBC; m/s +70bp area
•Telstra, 10.5-yr; DB/HSBC/JPM; m/s +115bp area
•ADB, 7-yr global; JPM/MS

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