In my previous post I noted that I thought the curve would steepen more from current levels. I think that those who were happy holders of flatteners will either reduce or exit those positions. In my opinion that is the resting trade in the street and in the near term it is the one which can inflict the most pain on traders.
In addition supply factors will favor that steepening process as the next round of supply from Jack Lew and his acolytes is 3s 10s and 30s. That announcement is Thursday and traders who want to establish steepening trades will feel more comfortable doing that knowing that the Treasury is a seller next week.