Overall, Treasuries ground lower on Monday. While flows were not robust, they were slanted to the sellside, so Treasuries took another pounding with mortgage-related and technical selling the main impetus. Treasuries opened lower as position-adjusting added pressure. The lower prices sparked selling, with retail and mortgage-related sales further out the curve adding more pressure.
Mortgage related convexity hedging was also seen in swaps, underscoring chunks of swap-desk sales of 5-year and 10-year notes. But it was the strength reported in non-manufacturing ISM, the increase in the employment component in particular, that sent Treasuries lower during the morning session. The lows held initially on short covering, but prices conitnued to fall during the afternoon on continued selling.