OVERNIGHT TREASURIES

•Bonds hit as Bunds crater under positive EU summit outcome
•Big volume, 301k 10-year futures trade by 06:32 EST
•September 10s trade 134-01/133-09 overnight, 133-16.5 last
•10s lead way down under Asian selling, other flows more mixed
•10s trade in a range of 1.659% and 1.623% overnight.
•USTs outperforming EGBs by 5.5bp in the 10yr maturity compared to the previous London close.

MARKET BIAS

•The tactical bias is neutral, equally favoring both the buying of dips and the selling of strength
•Look for a range of 1.67% to 1.60% in 10s
•The strategic bias is flat
•The curve bias legged into a 5s/WI7s flattener at +39 bps (0.685% and 1.075%) which we will look to exit into this morning’s POMO

TECHNICAL OVERVIEW

DATA

•08:30 Personal Income (May) (mkt +0.2% m/m, prev +0.2% m/m)
•08:30 Consumption (May) (mkt 0.0% m/m, prev +0.3% m/m)
•08:30 Core PCE (May) (mkt +0.2% m/m; prev +0.1% m/m, +1.9% y/y)
•09:45 Chicago PMI (Jun) (mkt 52.9, prev 52.7)
•09:55 Michigan Sentiment (fJun) (mkt 74.1, prev 74.1)
•09:55 Current Conditions (fJun) (mkt 82.1, prev 82.1)
•09:55 Expectations (fJun) (mkt 69.0, prev 68.9)

EVENTS

•07:00 FRB St. Louis’s Bullard (non-voter, hawk) TV interview
•09:05 FRB St. Louis’s Bullard (non-voter, hawk) on the economy and monetary policy; Little Rock, AR
•11:00 Fed outright Treasury coupon purchase (06/30/2018 – 05/15/2020) (e: $4.25 – $5.25 bln)