The belly of the curve underperformed once again, particularly the five-year note, but there is no indication yet that the market is ready to resume a gradual flattening bias. As a result there is risk for modest curve steepening in the next few days targeting +192/195 basis points in the when-issued two-year to 10-year notes and possibly +245/247.4 basis points in the two-year note and 30-year bond before peaking.
Outright, both the June 10-year notes and June Bond are are starting to see a mild volatility expansion. Basing action above Thursday's lows sets the stage for another crack at the February peak at 106-120 briefly in the June 10-year notes. The June Bond should challenge late February highs at 103-14/15 before selling opportunties emerge.