Prices of Treasury coupon securities are registering modest losses in overnight trading. The 10 year note has retreated once again to the 3.72 percent level which recently has been a zone in which buyers appear. I am not so sure this time as there is no particular piece of information available overnight which might have prompted the sell-off. In my opinion, the market is reacting to the impending supply announcement a little later this morning.
At that time the Treasury will reveal the details of the 3 year,10 year and 30 year auctions which are on the docket for next week. The package should total in the vicinity of $75 billion which would be the largest package of those three issues since the dawn of time.
The yield on the 2 year note broke down through recent support at the 1.20% level and increased 4 basis points to 1.24 percent. The yield on the 3 year note increased 4 basis points to 1.76 percent. The yield on the 5 year note climbed 4 basis points to 2.73 percent. The yield on the 7 year note increased 3 basis points to 3.37 percent. The yield on the benchmark 10 year note edged higher by 3 basis points to 3.72 percent. And the yield on the Long Bond increased 4 basis points to 4.50 percent.
The 2 year/10 year spread is 248 basis points.
The 10 year/30 year spread is 78 basis points.
The 2 year/5 year/30 year butterfly is 28 basis points.
ADP will release its estimate of non-farm payrolls today. One analyst I read notes that in Q2 they were not very reliable predictors as their average miss was 124K per month.
Non-manufacturing ISM is expected to be 48.