Bidder Up: The market was able to take back a chunk of ground with the long end leading, pushing back to Thursday levels with the 10-yr nicking 2.598% after sending much of the afternoon ticking around the 2.62% point. The day's auction went off well enough with the 3-yr seeing a bit of a higher yield but well within expectations, and otherwise solid demand. There maybe a less smooth outing on tomorrow's reopened 10-yrs with extreme low yields and heftier duration, but as the grab for yield goes on it should be at least an average offering. There will also be a batch of $35 bln 4-wks on the block. The day ahead has some late session data with the Fed's beige book. The curve was swung well flatter, to Friday levels with the 2-10-yr yield spread running 210.8 while the 3-mo-10-yr was sent to 246.8 from 257.7. The dollar was able to hold gains but was unable to get up and hold over 82.80 on the index while the euro has slumped off through 1.27 to 1.2682. The yen was run up across the bored as safety came back in to play but backed off late on squaring on the buck but continuing to churn better on the euro. The day ahead has the Beige Book (14), consumer credit 915) and Fed-speak has MN's Kocherlakoda (14:30). The day's key event will be the $21 bln reopened 10-yr auction (13).
 

Buck Bid: The dollar has been holding gains but has been unable to take out the 82.80 point in a meaningful way, with the index bouncing between 82.74/79. The euro has been grinding lower with the 1.27 spot magnetic and the currency churning in that direction where it finds some support. The yen was able to take out the recent 15-yr levels on the buck at 83.52 it has backed off and stalled near 83.70 as intervention appears to remain on the back burner while working near its Sept best on the euro in a steady drip. Gold has held its bid with spot 1257.75 (+7.80) while crude rebounded some to settle 74.09 (-0.51).
 

Issues: AON selling $600 mln 5-yrs, $600 mln 10-yrs, and $300 mln 30-yrs

Allergan selling $650 mln 10-yrs

 

 

Holding Bid: Trade caught a bid following the auction with an uptick in size and taking the 10-yr to tag 2.618% as stocks drag along on the low end. The curve was slanted flatter with the 2-10-yr yield spread running 212.3. The uptick in concerns over Europe are unlikely to go away any time soon with BBH noting "European countries on the periphery have not been frozen out of the capital markets. They have sold their bonds (in Greece's case, bills) at higher, though not exorbitant rates. At the same time economic growth in the region accelerated markedly in Q2 over the near stagnation in Q1. On the hand, the vulnerability of the U.S. economy is sufficiently obvious that the Federal Reserve adopted what is essentially an easing bias and will resist a passive contraction of its balance sheet. The Obama Administration is in the process of a unveiling a new infrastructure renewal, business investment, job-creating package, which, if as suggested may be worth as much as $100 billion is thought too small to call a second stimulus."
 

Auction Out: The $33 bln 3-yrs draw 00.790% with a 3.21 cover, an indirect bidder take of 42.4% and a direct end run take of 11.7%.

 

Auction Up: The market has been edging higher into the auction with the long end leading while the 3-yr is trading near 0.755%. The market is looking at 0.785% 0.795% on the offering with a potentially small tail. There is little size going through here.
 

Sitting Higher: The market has been riding a safety wave with concerns over global stability and sliding stocks keep a floor under prices in the face of supply. There are large batches of corporate issuance on tap and more expected while the government kicks off the week's big auctions with a $1 bln smaller sized $33 bln 3-yrs (13) while also having stepped in to buy minor amounts of bonds in the 2014 to 2016 maturity space. Tomorrow's reopened 10-yr offering will garner more attention, but today's shorter dated should go off well enough. The 10-yr will have some trouble rocking through the 2.62/25% area, while traders report a large block play over 12K in the futures and options guys see size in the Oct 127-00 10-yr calls (futures 124-17). The previous 3-yr saw 0.844%, record low yield and a cover of 3.31, the second highest and an indirect bidder participation rate of 40.5% and 15.8% to directs. The 10-auction averages are 3.14 and 50.1% and 12.8% on directs. The demand should be solid, although indirects may flounder some, with the 3-yr yield at 0.755%. The curve has been working to a flatter stance with the 2-10-yr yield spread running 214.4 with 213.5 a likely barrier. The dollar has been well bid with the index running 82.73 and likely to have some trouble near 82.80 while the euro is off to the lowest in Sept with some support near 1.27. the yen has been knocked up to its best on the buck since mid-1995 and is near 106.50 on the euro the fewest since late Aug.

 

Bid: The dollar has been run up to near the best levels on the month with the index up to 82.84, but should find 82.80 pretty magnetic. The euro is also near its lows in the same timeframe with the 1.27 likely to be a bit of a barrier, while also having slid to the worst on the yen since the end of Aug, but nearing oversold territory there. The yen has been able to take out its recent best on the buck ticking to 83.52 with a barrier near 82.52 and edging to overbought. Gold has been run-up to its highest since late June with spot 1255.85 (+5.80) as stumbling stocks lure safety buying.Crude is getting drilled lower to the lowest since the start of the month 73.15 (-1.45) as global demand is thrown in to question.

 

Fed-Up: Fed buys bonds in the 2014 to 2016 maturity range $2.708 bln of $15.646 bln submitted
 

Bills: Auction $35 bln 4-wks Tuesday and $25 bln 8-wk cash management bills Wedneday
 

Issues: BNSF selling $500 mln 10-and-30.5-yr

France Telecom selling $750 mln 5-yrs

Aon selling minimum $500 mln 5-10-and-30-yrs

SocGen selling $500 mln minimum 3-5-yrs

Home Depot selling $1 bln 10-and-30-yrs

International CCE selling $1bln 5-and-10-yrs

 

 

Clinging: The market is aiming for new highs with the 10-yr feeling around for the 2.62% sticking point. The curve has also resumed its move to flatter levels with the 2-10-yr running 215. The market is eyeing stocks as they likely get cleaned up for a late session rally (why? Why not?). Players might be filtering back in but volumes remain pretty light and the onslaught of issuance coming in will need to see some price drag on set-ups.

 

Issues: Dell selling $1.5 bln 3-5-and-30 yrs
 

Bidder Up: Trade has got a bid with the market chasing the safety play as bank strength in Europe is in question and global stability a concern and stocks back off. The bund has been helping lead trade higher while the 10 year is working toward 2.62% yield. BBH this morning notes that with payrolls out of the way "the market has been able give full attention to the negative European developments, which include new questions about the stress tests, concerns over the amount of capital that will need to be raised under Basel III, and reports suggesting euro zone governments will seek to raise 100 bln euros this month, roughly twice the amount raised in August. Weak German manufacturing orders were sufficient to push the euro through support near $1.2750 and, although short-term technicals are over stretched given the nearly 2 cent pullback from yesterday's highs, new lows are likely in the North American session." The curve has been leaning flatter with the 2-10-yr yield spread running 215, still near the steepest since mid-Aug. The dollar has been pushing the strongest levels in Sept with the index aiming for 82.80 where is may hit some turbulence. The euro is back off to the lowest since the start of the month but may stall neat 1.2750 with a similar move off on the yen. The yen is gunning for the best levels ever, testing the 15-yr lows on the buck. There is no data on the day but has $30 bln apiece in 3-and-6-mos as well as the kick-off on the 3-10-and-30-yr auctions with a $1 bln trimmed $33 bln 3-yr offering (13). The market will also be dodging what is expected to be a big week in corporate offerings with global issues hitting the wires.
 

With new sovereign debt fears in Europe, traders are moving to the risk-averse currencies. The preference of safety is causing the dollar index to push higher, as it now trades near 82.65. The euro is near its lowest level of the session, falling below 1.2750, and trading at its worst level in almost a week. The pound took another leg lower in the past half hour before finding support near 1.5320 while the risk-averse Swiss Franc is unchanged at 1.0124. The yen is just off its 15-yr high of 83.60, trading 83.85 on the safety bid. The yuan closed weaker to 6.7912.
 

Treasuries are off their best levels of the morning, but still moderately higher as renewed sovereign debt fears in Europe are sending investors to safer assets. The 10-yr yield is back down to 2.648% from Friday's high yield of 2.764%. The 30-yr is trading similarly, seeing its yield fall to 2.728%. The 2-10-yr spread is running 215.7, flatter from 219.0 while the 10-30-yr spread is little changed at 107.4. Spot gold is slightly lower to 1247 and remains within striking distance of its 1265 record high. No data is schedule for release today, but there is a 3-yr auction (13).
 

Dinged: The market was given a beat down, again, as the payrolls number came in better than expected, still negative and along with an uptick in the underlying rate, but still...The ISM report was not quite so pretty, but, as always, jobs trump all else, and the market was only able to get a little back with some help from pre-long holiday weekend buying and some squaring, but most of the market was gone by 10. Trade stalled and the 10-yr settled near 2.7%, the worst since 8/10 while the focus will now turn to supply with the $33 bln 3-yrs Tuesday, $21 bln 10-yrs Wednesday and $13 bln 30-yrs Thursday. There will also be the usual $30 bln each of 3-and-6-mos Tuesday. The week starts slow with data on hold until Wednesday, but the market should make a move to battle back some, although there is plenty working against them here to keep things pressured. The curve trade stalled out near 219 on the 2-10-yr yield spread after a run steeper to 224 and change the widest since 8/10. The dollar was pushed lower with the index 82.01 while the euro saw 1.2890 and the yen swung from 85.20 to 84.20 on the buck as safety plays backed out and came back. The long holiday weekend, not sweetened by an early close in bonds (thanks to a 2-1 vote) head into a Tuesday empty of data or Fed-speak but starts the auctions with the 3-yrs (13).
 

Treasuries are set for a positive jobs report with the long end dragging while the shorter stuff holds. The 10-yr has been backed up to trade at the 2.654% point as renewed risk infatuation infects trade. Global bonds are on offer with the bund at the worst levels in 11 sessions as optimism, and/or rumors, drive action. The data is going to have a swift and brief attack on prices with players itching to get out for the long holiday weekend. The curve has been held to the steepest levels since 8/19 with the 2-10-yr yield spread running 216. The dollar has been stalled with the index running 82.40 while the euro ekes out a small gain and the yen slides some. . The day has jobs (8:30) and the ISM services (10) while ATL Fed's Lockhart speaks.