12:00ET Treasuries lower as traders look to CPI : The market has been channeling in a narrow 3 bp range in the 10-year after moving as high as 4.856% on the open of trading Sunday. Treasuries in the EuroZone, after opening lower on inflation woes, have been trending higher and are heading into the close relatively unchanged. The dollar is weaker against the euro and sterling following the widening of the U.S. trade gap this morning while holding gains against the yen on a likely rate hike in China. After opening lower the market has clung to slight gains, driven in part by geopolitical issues. The curve continues to flatten as the 2-10 spread narrows from 199.3 Friday to 194.8. The market has shown itself jittery about inflationary issues, and will be watching Tuesday's CPI report for May (and perhaps PPI) to determine the extent of the Federal Reserve's action at month's end. The "flatter-day volume has been fairly good, especially in the 10-years, but died some heading into mid-day," noted one dealer, "today we will churn around in anticipation of tomorrow's news and data," with CPI and Greenspan locking up players' attention. Ongoing violence is helping support a market weighed upon heavily by both fundamental and technical pressures. The 10-year is currently -09/32nds, yielding 4.836%, 2-year is currently -05/32nds, yielding 2.888%, 5-year is currently -01/32nds, yielding 4.063%, 30-year is currently -10/32nds, yielding 5.498%.
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