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Forex Flash: US economic concerns create headwinds for 10-year treasuries – RBS
FXstreet.com (Barcelona) - According to the RBS Research Team, “We are not bearish Treasuries because we still see evidence of a short base and because of lingering concerns about a probable step-down in Q2 growth/consumption and employment (versus Q1) due to sequestration, Europe, and our belief that the >3% real consumer spending pace in Q1 is unsustainable given real income growth. We expect a correction from a deep overbought condition to give us better entry levels in the coming few weeks.”
Our overnight Treasury flows saw very light activity as EU debt spreads stayed close to home as there was very little new news aside from the spate of supply in Europe and now the US. We saw some central bank buying in 5's and nothing else of note. Total Treasury market inter-dealer overnight volume was somehow 105% of the 10-day average.