Bonds trade slightly higher with Bunds overnight, better overseas buying helps too

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OVERNIGHT TREASURIES

•Bonds trade slightly higher with Bunds overnight, better overseas buying helps too
•Light volume before release of employment report, 98k 10-year futures trade by 05:37
•September 10s trade 134-06.5/133-29 overnight
•Asian/fast money accounts lift fives, receive 10s, lift belly generally
•10s trade in a range of 1.585% and 1.571% overnight.
•USTs underperforming EGBs by 0.7bp in the 10yr maturity compared to the previous London close.

MARKET BIAS

•The tactical bias is neutral heading into payrolls, though will look to fade the initial payroll feint anticipating a lack of follow through.
•Look for a range of 1.67% to 1.53% in 10s.
•The strategic bias is flat, though will look for an opportunity to fade any extreme post-payroll yield move.
•The curve bias is flat, though anticipated looking to get long the belly on any corrective cheapening.

TECHNICAL OVERVIEW

DATA

•08:30 Nonfarm Payrolls (Jun) (mkt +90k, prev +69k)
•08:30 Private Payrolls (Jun) (mkt +102k, prev +82k)
•08:30 Manufacturing Payrolls (Jun) (mkt +5k, prev +12k)
•08:30 Unemployment Rate (Jun) (mkt 8.2%, prev 8.2%)
•08:30 Average Hourly Earnings (Jun) (mkt +0.2% m/m, prev +0.1% m/m)
•08:30 Work Week (Jun) (mkt 34.4 hrs, prev 34.4 hrs)
•15:00 Treasury STRIPS (Jun)

EVENTS

•11:00 Fed outright Treasury coupon purchase (01/15/2013 – 06/30/2013) (e: $7.00 – $8.00 bln)

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