Core Viewpoint - Strong employment data has led to a significant shift in market expectations, resulting in a large-scale unwinding of long positions in U.S. Treasury futures, which in turn has driven yields higher [1][2]. Group 1: Market Reactions - Following the release of robust non-farm payroll data, traders sold approximately $7 billion in 10-year Treasuries, leading to a sharp decline in open positions [1][2]. - The strong employment figures have caused market participants to reduce their expectations for a rate cut in July to zero, prompting a sell-off in bonds [1][2]. Group 2: Auction Pressure - Upcoming auctions of $39 billion in 10-year Treasuries and $22 billion in 30-year Treasuries are expected to further pressure long positions, especially if demand appears weak [1][3]. - A recent auction of $58 billion in 3-year Treasuries showed solid results, providing some support for subsequent auctions [3]. Group 3: Positioning and Sentiment - Asset managers aggressively increased their long positions in Treasury futures before the employment report, with net long positions in 5-year and 10-year contracts reaching record highs [3]. - Following the employment data, traders are seeking both upside and downside protection, indicating increased uncertainty regarding interest rate prospects [3].