Prices of Treasury coupon securities posted marginal declines in overnight trading. The yield on the 2 year note climbed by the most  as it edged higher 3 basis points to 1.12 percent. The yield on the 3 year note increased 2 basis points to 1.62 percent. The yield on the 5 year note increased just a single basis point to 2.53 percent. The yield on the 7 year note climbed 2 basis points to 3.18 percent. The yield on the 10 year note gained a basis point to 3.48 percent. The yield on the Long Bond moved higher by 2 basis points to 4.30 percent.

The 2year/10 year spread narrowed to 236 basis points.

The 2year/5 year/30 year spread is unchanged at 36 basis points.

The spread between the 10 year note and the Long Bond has increased to 82 basis points. That spread had narrowed to about 73 basis points when the bond market was occupying itself by making room for supply in the belly of the curve.

In the UK revised data showed that the economy contracted 2.4 per cent in Q1 from Q4. That is the steepest pace of decline since 1958.

The jobless rate in Japan rose to a 5 year high of 5.2 per cent in May.

Conversely, consumer spending in Japan posted its first gain in 15 months as spending rose 0.3 percent.

In the US market participants will have a chance to ponder the Case Shiller housing report. The consensus looks for a YOY decline of 18.6 percent. Economists at UBS say that is consistent with monthly decline of 1.6 percent,seasonally adjusted. UBS economists in their own forecast expected a seasonally adjusted decline of 0.7 percent in April.

The Chicago Purchasing Managers Index is expected to post a small decline to 39 from 39.4 in May.

And the Conference Board survey probably rose to 55.3 in June from 54.0 in May. To keep the number in some frame of reference note that it averaged 29.9 in Q1.

I expect another very quiet day with some upside price bias from current levels. There will be buying by index accounts for month end and that should provide a bid into 300PM.