OVERNIGHT TREASURIES

* Traded in a contained range as Europe was still out on Holiday.

MARKET BIAS

* The tactical bias is supportive favoring the buying off dips after the weaker than expected payroll report that will now likely put more intense focus on Europe’s stress.
* Look for a 2.12%-to-2.00% range in 10s.
* The strategic bias legged into a 7s/30s flattener at 172.8 bps (50% at 1.57% vs. 3.249% and 50% at 1.437% and 3.212%).
* The curve bias is flat after exiting an old 7s/10s steepener from 62 bps at 64.5 bps and a 50% 5s/30s steepener from 234.2 bps at 230 bps for a flat P&L.

TECHNICAL OVERVIEW

DATA

* No significant data releases scheduled

EVENTS

* 10:15 Fed outright TIPS sale (07/15/2012 – 01/15/2015) (e: $1.00 – 1.50 bln)

ISSUANCE

* 11:00 Treasury announces 4-week bills (e: $25 bln)
* 11:30 Treasury auctions $31 bln 3- and $29 bln 6-month bills