A Flat Start

TYH2 flat at the re-open, dealing unchanged at 126-29, after finishing NY trade comfortably above Monday’s early Asia lows, sticking to a narrow range in the process.

• To recap, the cash Tsy curve was subjected to some very modest twist steepening pressure on Monday, with the long end retracing from intraday cheaps on the back of comments from ECB President Lagarde, who offered little in the way of fresh hawkish fuel. At the same time, she failed to really push back against the recent market repricing re: ECB tightening, pointing to a need for a “gradual” shift in policy settings, while stressing that the Bank wants to maintain its optionality. 2s were ~2bp richer on the day, while 10+-Year paper finished the session ~1bp cheaper. The curve pivoted around the 5- to 7-Year zone.
• Looking ahead, NFIB small business optimism headlines Tuesday’s U.S. data docket, while issuance will be headlined by 3-Year supply.