OVERNIGHT TREASURIES

•USTs soft in Asia, better bid in London – repeat of Monday
•Large size seller of 10s seen in Asia, decent buying of short end in London time
•Bunds also show resilience, nagging doubts over Europe
•10-yr yields in range of 2.20% and 2.176% overnight
•USTs outperforming EGBs by 0.4bp in the 10yr maturity compared to the previous London close.

MARKET BIAS

•The tactical bias is neutral/defensive, favoring the selling of strength early in the Payroll week.
•Look for a 2.25% to 2.17% range in 10s.
•The strategic bias is flat.
•The curve bias is in an old 7s/10s steepener at 62 bps after exiting a 3s/7-year flattener put on at +109 bps (0.50% and 1.59%) at 107.4 bps for a 1.6 bps profit.

TECHNICAL OVERVIEW

DATA

•07:45 ICSC/GS Chain Store Sales Index (wk Mar 31) (prev +2.7% y/y)
•08:55 Redbook Same Store Sales Index (wk Mar 31) (prev +3.8% y/y)
•10:00 Factory Orders (Feb) (mkt +1.5% m/m, prev -1.0% m/m)
•10:00 Factory Orders ex-Trans (Feb) (prev -0.3% m/m)
•Light Vehicle Sales (Mar) (mkt 14.75 mln, prev 15.10 mln)

EVENTS

•10:15 Fed outright TIPS purchase (07/15/2018 – 02/15/2042) (e: $1.00 – 1.50 bln)
•14:00 FOMC minutes
•16:05 FRB San Francisco’s Williams (voter, dove) FOMC meeting simulation for students; University of San Diego

ISSUANCE

•11:30 Treasury auctions $30 bln 4-week and $26 bln 52-week bills