Modest bid out curve in quiet overnight trading

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OVERNIGHT TREASURIES

•Modest bid out curve in quiet overnight trading
•Moderate volume, 151k 10-year futures trade by 06:33 EST
•USTs underperforming EGBs by 0.3bp in the 10yr maturity compared to the previous London close.
•10s trade in a range of 2.044% and 2.025% overnight.

MARKET BIAS

•The tactical bias is neutral/defensive, looking for a short opportunity ahead of the 30-year supply.
•Look for a 2.08% to 2.00% range in 10s.
•The strategic bias is flat after covering a 50% position in WI 10s from 2.02% at 2.043% at auction for a 2.3 bps profit. We anticipate looking for an auction set-up short in 30s ahead of its auction.
•The curve bias is flat after exiting a 7s/30s flattener from 172.8 bps at 177.8 bps for a 5 bps loss.

TECHNICAL OVERVIEW

 

DATA

•08:30 Initial Claims (wk Apr 7) (mkt 355k, prev 357k)
•08:30 Continuing Claims (wk Mar 31) (mkt 3.340 mln, prev 3.338 mln)
•08:30 International Trade (Feb) (mkt -$52.0 bln, prev -$52.6 bln)
•08:30 PPI (Mar) (mkt +0.3% m/m, +3.1% y/y; prev +0.4% m/m, +3.3% y/y)
•08:30 Core PPI (Mar) (mkt +0.2% m/m, +2.8% y/y; prev +0.2 % m/m, +3.0% y/y)

EVENTS

•09:45 FRB Atlanta’s Lockhart (voter, moderate) to moderate panel on U.S.-Mexico ties
•10:15 Fed outright Treasury coupon purchase (05/15/2020 – 02/15/2022) (e: $4.25 – 5.00 bln)
•12:30 FRB Philadelphia’s Plosser (non-voter, hawk) on the economic outlook; Washington DC
•13:00 FRB Minneapolis’s Kocherlakota (non-voter, hawk) on the economic outlook; White Bear Lake, MN
•15:30 Fed Governor Raskin (voter, dove) on the economy; Los Angeles, CA

ISSUANCE

•11:00 Treasury announces 3- and 6-month bills (e: $31/29 bln)
•11:00 Treasury announces 5-year TIPS (e: $16 bln)
•13:00 Treasury auctions $13 bln 30-year bonds

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