20-Year Tsy Supply Well-Received, FOMC Eyed

T-Notes flat at the re-open, +0-00+ at 133-06+. The contract went out around the middle of its Tuesday range, after testing Monday's high in the wake of a BBG source report which noted that China Evergrande missed interest payments due to at least two of its major creditors on Monday (no surprise). Still, cash Tsys were little changed to ~1.0bp cheaper come the bell, with 10s representing the weak point on the curve.

• 20-Year Tsy supply was well received, stopping through WI by 0.2bp, as primary dealer takedown slid to the lowest level witnessed since 20-Year supply was reintroduced, although the cover ratio saw a marginal downtick when compared to the previous auction. The well-received round of supply allowed 20s to richen to the firmest levels witnessed since April on the 10-/20-/30-Year butterfly.
• A 10,272 block buyer (~$519K DV01 equivalent) of FV futures was also apparent during the NY morning, which aided the previously outlined Evergrande-related bid. $IG issuance-related hedging flows were also seen. The short end saw a 59K lift of the 3EV1 98.375 puts ahead of tomorrow's FOMC decision, a position which could benefit from a more hawkish dot plot within the fresh SEP.
• Chinese markets return from the elongated weekend on Wednesday (Evergrande reaction eyed), although a market holiday in Hong Kong will limit broader liquidity. The Asia-Pac session will be headlined by the latest LPR fixing from the PBoC, as well as a monetary policy decision from the BoJ, although neither are expected to impact the U.S. Tsy space. Elsewhere, it will be the previously mentioned FOMC monetary policy decision that headlines the broader docket on Wednesday, with the central bank's commentary surrounding tapering and the particulars within the SEP set to be scrutinised.