a couple quick notes on a summer Friday….

Markets are marking time on this summer Friday after a long enough week and ahead of a crowded calendar over the next several weeks. A holiday in Japan on Monday only further lightened the interest in trading. The only reason to stay awake today is for the release of Powell’s prepared testimony at 11 AM ET, ahead of his appearance before Congress on July 17. As of 8 AM ET, Treasuries are marginally lower in yield in the middle of their overnight ranges while equity futures are a hair better ahead of the cash open.

The Asian session was a quiet one, made the more so by people taking a long weekend ahead of the Japanese holiday on Monday. Today marked a full week of Japanese real money selling in US 5y, but today they passed on selling 7s. Instead, Asian banks paid in USD 5y and 7y swaps. The flattening pressure on the curve actually brought out some RV selling in 30s around Tokyo lunch, and then Treasuries went to sleep until after the European open as volume was less than 60% of average in futures and even worse in cash. Locally, market largely ignored Chinese trade data, with Asian bourses closing up in the main led by a 1.8% gain for the NIKKEI; a small pullback in the Shenzhen was the only loser among the Asian core markets. JGBs traded quietly, with BoJ purchase largely as anticipated, but a little position squaring in the long end left 30s and 40s slightly higher in yield ahead of the holiday.

Shortly after the European open, bunds went bid seemingly on air, having really not looked back since then. Stocks pulled back from their lofty opening levels, but still trade positive and certainly don’t explain the rally in bunds. CTAs were buyers (stop out) through last week’s highs in bunds and buxl; central banks bought US 2s and schatz; macro account bought bunds against gilts; RM bought bunds and buxl; hedge fund rolled calls out the calendar; and, deal-related buying occurred in both bobl and US 5s. But really not that much traded as markets all marked time. No real data in Europe to move the market, with most attention focused on Trump/May meeting, especially after Trump’s rough interview last night. European equities are mildly higher, decent JPM earnings have helped bid US equity futures, and peripherals are in line with bund gains to slightly better (Italy).

Today’s calendar includes import/export prices at 8:30 AM ET, followed by preliminary July Michigan Sentiment at 10 AM ET. Bostic speaks at 12:30 PM ET in VA, but the big event of the day will be Fed’s release of Powell’s prepared testimony at 11 AM ET ahead of his appearance before Congress next week.

Don’t have a big axe or call here: you have traded in a 5 bps range this week and the market seems more likely to stay within the 13-tic range we have seen in TY contract this week (120-13 to 120-00). We got monthly long end supply and couldn’t even break out of the range, except in curve space. So for choice today, let’s call the range at 120-12 to 120-02+ (yes, almost the WHOLE week’s range!). Below 120-02+, there is my favorite 119-29 level we can never seem to tag, 119-22+, 119-19, 119-13+. Above 120-12+, watch 120-15+, 120-22, 120-29, 121-02.

Have a great weekend and good luck getting through Friday the 13th….