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Overnight, the US Treasuries curve bull flattened as sentiment got a bit shaky. There was no obvious trigger for weaker sentiment. After a sizable risk rally over the past few weeks, we think it may just be investors turning more cautious ahead of the Supreme Court’s decision on tariffs and NFP payrolls on Friday Data released indicate that the US economy is mixed. On the downside, there was a small miss in ADP employment (actual: 41k, consensus: 50k) and a larger miss in JOLT job openings (actual: 7146k, consensus: 7648k). However, this was more than offset by the strong showing in ISM Services (actual: 54.4, consensus: 52.5). Moreover, the new orders and employment subcomponents were both strong suggesting that US economic momentum remains intact. Taken together, we would downplay the weakness in the JOLTs numbers, noting that this data set tends to be volatile.
Looking ahead, we think that the set of labour market data released on Friday is likely to be resilient. Note that the bull flattening reflects weaker sentiment as investors demand a bit of safety in the back end. Meanwhile, frontend yields appear supported. In the absence of weak data, there may not be a need to price in more / or earlier rate cuts. We think that there will be interest to fade rallies if 2Y yields get closer to 3.4%. 
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