SONIA: Calendar spreads are dominating the flows

• Treasuries are firmer across the curve as they react to a WSJ report reiterating stances seen last week that the EU is preparing to pushback more firmly against US trade measures. MNI reporting had indicated a similar stance last week.
• Volumes are subdued, in part after a Japan holiday.
• It’s a thin docket today, with the Conference Board’s Leading Index leading the calendar and President Trump not scheduled for any notable events according to Roll Call.
• Cash yields are 2.5-4bp lower on the day, with the front end lagging. Treasuries underperform EGBs, where many 10Y yields are 6-7bp lower.
• Curves flatten away from last week’s particularly elevated levels, with 2s10s at 53.4bp and 5s30s at 103.8bp. The latter compares to Wednesday’s fresh ytd high of 108.5bp in a spike on worries that Trump was going to imminently fire Fed Chair Powell.
• TYU5 trades close to session highs of 111-04+ albeit on low cumulative volumes of 220k.
• It has cleared the 20-day EMA to open resistance at 111-08 (Jul 11 high) with focus on 111-13+ (Jul 10 high). To the downside, support remains at 110-08+ (Jul 14/16 lows).
• Data: Conference Board Leading Index Jun (1000ET)
• Fedspeak: Now in media blackout for Jul 29-30 meeting
• Bill issuance: US Tsy $82B 13W, $73B 26W bill auctions (1130ET)

OI data points to net long setting dominating through the SOFR greens on Friday, before net short cover came to the fore in the blues.

SFRU5 5K given at 95.840.