Morning Recap: USTs closed out y'day better bid with RM and FM seen grabbing cash bonds below 89.00 and 10's below par. RM were seen buying off-the-run 10's as well as 5's thoguh-out the day. USDswaps saw short covering and duration addition, with some initiation of steepener trades observed. USTs remained bid in the overnight and London session, also aided by a dovish Berry report. JGBs were bid on hedge unwinds and ahead of next week's JGB redemptions/coupons (JPY 10 bn). EGBs opened unchanged, small off and have remained rangebound, as exepcted, ahead of NFP. FM accounts are small long, pre-empting deal pricings (IM Cedulas 10yr book closed at 10) but are running tight stops. UK Gilts had a flurry of activity from the off, with aggressive 20yr GBP paying. Inflation swaps also got hit (15yr, 20yr and 25yr) said to be hedges on St Helens deal (at a loss). Swapping activty dried up after 9.00BST and short-covering witnessed in futures. All attention turns to NFP with +165k the median. This increase in payrolls should still be enough to hold the unemployment rate at 4.7%. Also closely watching Average Hourlies and most houses expect an earnings print of 0.3% m-o-m, causing the year-over-year rate to increase by 3.9% but do not rule out at 0.4% print mom. Chicago Fed President Moskow speaks on the economic outlook at 18.30-BST. Also watch out for possible rate locks/corp selling of USTs ahead of next weeks issuance.
