Bonds lower overnight in reaction Germany agrees to run EFSF/ESM rescue funds simultaneously

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OVERNIGHT TREASURIES

•Bonds lower overnight in reaction Germany agrees to run EFSF/ESM rescue funds simultaneously
•Moderate volume, 146k 10-year futures trade by 06:30 EST
•Talk Asian selling hits 10s
•USTs underperforming EGBs by 0.1bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 2.244% and 2.271% overnight.

MARKET BIAS

•The tactical bias is neutral, buying both dips and selling strength though with the 200-day moving average in 10s is taken out (2.25%), the emphasis will revert to dip buying.
•Look for a 2.28% to 2.20% range in 10s.
•The strategic bias is flat, after a selling out of a 50% 10-year position from 2.24% at 2.235% for a 0.5 bps profit.
•The curve bias is in a 7s/10s steepener at 62 bps.

TECHNICAL OVERVIEW

 

 

 

 

 

 

 

 

DATA

•08:30 Chicago Fed Nat’l Activity Index (08:30) (prev +0.22)
•10:00 Pending Home Sales Index (Feb) (mkt +1.0% m/m, prev +2.0% m/m)
•10:30 Dallas Fed Texas Manufacturing Outlook Survey (Mar) (prev +17.8)

EVENTS

•07:30 FRB Philadelphia’s Plosser (non-voter, hawk) on “Re-Examining Central Bank Orthodoxy for Un-Orthodox Times”; Paris
•08:00 Fed Chairman Bernanke (voter, dove) on “Recent Developments in the Labor Market”
•10:15 Fed outright Treasury coupon sales (02/15/2013 – 07/31/2013) (e: $8.00 – 8.75 bln)

ISSUANCE

•11:00 Treasury announces 4-week bills (e: $35 bln)

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