Bonds follow Bunds slightly lower, long-end weighed down by easier ALM requirements in Netherlands

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OVERNIGHT TREASURIES

•Bonds follow Bunds slightly lower, long-end weighed down by easier ALM requirements in Netherlands
•Moderately light volume, 137k 10-year futures trade by 06:23 EST
•September 10s trade 134-00.5/133-27 overnight, 133-31.5 last
•Mixed flows, Japanese accounts better but small buyers belly, better selling belly from Asia in reasonable size
•10s trade in a range of 1.591% and 1.599% overnight.
•USTs outperforming EGBs by 0.6bp in the 10yr maturity compared to the previous London close.

MARKET BIAS

•The tactical bias is supportive, favoring the buying of dips as sellers are few and overseas as well as the Fed continue to buy in what is a very thinly traded holiday market.
•Look for a range of 1.63% to 1.53% in 10s.
•The strategic bias is flat.
•The curve bias is flat, but will look to reenter a 5s/7s flattener at 39 bps.

TECHNICAL OVERVIEW

DATA

•07:45 ICSC Chain stores w/w (prev 2%)
•07:45 ICSC Chain stores y/y (prev 2.7%)
•08:55 Redbook m/m (prev 0.4%)
•08:55 Redbook y/y (prev 1.9%)
•09:45 US ISM New York index (Jun) (prev 557.3)
•10:00 Durable ex-def m/m (May) (prev 0.7%)
•10:00 Durable m/m (May) (prev 1.1%)
•10:00 Factory orders (May) (mkt +0.2% m/m, prev -0.6% m/m)
•10:00 Durables ex-transport m/m (May) (prev 0.4%)
•10:00 Nondef cap ex-air m/m (May) (prev -1.6%)
•10:00 Factory ex-transport m/m (May) (prev -1.1)

EVENTS

•09:00 IMF Lagarde to release annual report on US economy

ISSUANCE

•10:30 Treasury auctions 4-week bills

 

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