The September bond found support at 103-07/08 and made a run back to 103-28, shy of Friday's 103-30 top. The curve did not really come to life, though the 2s/30s spread appeared uncomfortable above +167bp month wides. Neither the short-dated coupon pass, nor the Treasury borrowing shortfall after the close affected curvature.
Two camps have emerged this week, one looking for some profit-taking after outsized gains and rising open interest last week, the other favoring further upside movement as the economic recovery story remains elusive. Bulls have been aided by the global economy facing fresh fiscal rigidity in Japan and Argentina now, which appears ill-timed with the economic cycle locally and globally.
Little help is expected from the ECB Thursday and note that platinum hit 18-month lows on fears of slowing global industrial demand. Deflation still appears a greater present danger than inflation.