Quotes from BofA Merrill Lynch:
- We remain bearish US Treasuries and short TYM5. Now, watch the 100d in 10yr yields (now 2.119%) and 2.750% in 30yr yields. A close through both of these levels confirms a resumption of the medium term bear trends for 2.347%/2.419% and 3.003%/3.017%, respectively.
- Turning to the curve, 5s30s continues on its YTD consolidation. While this range is not yet complete, it is nearing its conclusion, from which we look for a resumption of the larger flattening trend to 81.4bps (14m channel) and eventually below to 64.3bps (secular channel support).
- Above 122.1bps/123.3bps invalidates the flattening setup and points to a larger steepening correction than anticipated.
