10-year maintains better bid in corrective start to week.

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•10-year maintains better bid in corrective start to week.
•Japan holiday leaves thin market unwilling to test resistance at 2.40%
•Japanese buyer of 7-yr sector, Asian buyers of 2-3-yr
•USTs underperforming EGBs by 0.3bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 2.343% and 2.365% overnight.


•The tactical bias is defensive and a seller of strength as even the arrival of the Fed’s coupon passes is proving to be a but a downside mitigating event rather than a supportive one as was hoped.
•Look for a 2.41% to 2.32% range in 10s favoring the selling of strength.
•The strategic bias is flat after exiting a 50% long position in 10s from 2.315% at 2.32% for a 0.5 bps loss.
•On the curve, we are in a 7s/10s steepener at 62 bps.











•07:45 ICSC/GS Chain Store Sales Index (wk Mar 17) (prev +2.3% y/y)
•08:30 Housing Starts (Feb) (mkt 700k, prev 699k)
•08:30 Building Permits (Feb) (mkt 690k, prev 682k)
•08:55 Redbook Same Store Sales Index (wk Mar 17) (prev +3.3% y/y)


•10:00 Senate Banking Committee to hold hearing for Fed nominations
•10:00 Treasury Secretary Geithner to testify before the House Financial Services Committee
•10:15 Fed outright Treasury coupon purchase (02/15/2036 – 02/15/2042) (e: $1.75-2.25 bln)
•12:45 Fed Chair Bernanke (voter, dove) lecture on “Origins and Mission of the Federal Reserve”; GWU, Washington DC
•17:30 FRB Minneapolis’s Kocherlakota (non-voter, hawk) lecture “On the Limits to Monetary Policy”; St. Louis


•11:00 Treasury auctions 4-week bills
•Schahin II Finance, $730 mln 10-year [talk 5.875% to 6% area]; Nomura/MS/DB/Miz

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