Halister News

(Bloomberg) -- Treasury curve bull steepens overnight, driven by risk-off moves as a result of swing in recent U.K. EU referendum polls toward Brexit.

• CFTC data show speculators had a major short-covering reversal in 10Y note futures ($14.1b swing), following the recent weak NFP numbers, Nomura writes in a client note
  • Net short in TY was approaching record levels, and is now almost flat, BMO writes in a client note
• Short-covering in coming weeks should see 5Y sector outperform outright and on the curve; add outright longs in 5Y notes at 1.17%, Morgan Stanley writes in note
• Analysts are mostly bullish on USD rates given the global bond rally, U.K. EU referendum risks, poor economic data; JPMorgan is the exception, recommends selling 5Y notes
• Focus is on large event risks this week with BOJ, FOMC and BOE all due to announce policy decisions
  • Even without Brexit, doubtful Fed will be hawkish as inflation expectations are falling and few fundamental reasons for rates to turnaround soon, RBS writes in a client note
• Technicals:
  • Resistance: 131-25+ (Overnight high, 1.61% 10Y), 131-27 (pivot r3)
  • Support: 131-00+ (June 10 low), 130-20 (June 6 low), 130-14+ (June 3 mid price), 129-27 (June 3 low)