US TSYS: Slightly Firmer Before NFPs, ISM Services, OBBB Vote and Early Close

• Treasuries are modestly firmer across the curve, initially boosted by the softer than expected China Caixin mfg PMI weighing on risk sentiment before a further bid in London hours.
• 2s and 5s remain within yesterday’s range. 10s and 30s in particular pushed above yesterday’s range but are still lower than Friday’s close as the late Friday doubling of aluminum/steel tariffs still weighs on US assets on net.
• Cash yields are roughly 2bp lower across the curve.
• As such, curves consolidate yesterday’s intraday flattening after 5s30s hit 100.2bps to come closer to ytd highs of 101bps (currently 96.6bp).
• TYU5 trades at 110-22+ (+07+) having eased off session highs of 110-26, with volumes at a subdued 265k.
• Resistance is seen at 110-30 (May 30 and Jun 2 highs) having last week breached an important 110-23 (May 16 high). A clear break could open 111-05+ (May 9 high).
• Data: JOLTS Apr (1000ET), Factory orders Apr (1000ET)
• Fedspeak: Goolsbee (1245ET), Cook (1300ET), Logan (1530ET) – see STIR bullet
• Bill issuance: Tsy to sell $60bn 6-W bills (1130ET)

Large Bobl Calendar Spread, Eurex rolls continue to dominate:

• OEM5/U5 bought for 101 in 50k.

There's been a lot of discussion about the reforms in the Bernanke review with the extra scenarios and data warehouse being built by the BOE. All of the MPC members have said that the introduction of scenarios has improved the quality of the discussion on the MPC.

• Mann: "When we used to have a discussion of... the relationship between wages and the labour market is is not very strong, a flat Phillips Curve, so to speak, or it's very tight. We were just talking through words, because the model now allows [our staff] to physically go in there... and change that parameter, and we can see what the impact would be of my story versus your story on the slope of a key relationship that underlies inflation. This is part of the reason why we can have much more constructive debates about prospects for the underpinnings for the inflationary pressure, or the wage pressure and inflationary pressure, which then, you know, obviously immediately feeds into the monetary policy decision. So to me, this re, this re-estimation, also also marries some of the partial equilibrium research that's done and has been part of, in particular, my decision making over the last couple of years, and the macro economic model, and having that marriage between micro and macro is something that, in my view, strengthens the underpinnings of the decision making process."