5s30s flattening remain on track

BofA Merrill Lynch notes ....

• We remain positive on the US 5s30s flattener. Downside targets are seen to 88.8bps, while steepening should not exceed last Wednesday's high of 113.0bps. 
  
  
• Below the Feb-09 low at 101.2bps confirms a resumption of the larger flattening trend. Turning to the S&P500, while we remain bullish ESM5, targeting 2109/2136 resistance, and have no interest in fighting the tape, we are concerned about near term seasonality and the VXV/VIX ratio.
• At this stage seasonality and the VXV/VIX ratio are only concerns. Indeed, trouble doesn't start until we see a break of 2074.00, while a break of 2052.25 is needed to invalidate the small head-and-shoulders base that is currently driving the market higher. Bears don't gain control until we break 2029.