A Little Cheaper In Asia

U.S. Tsys have softened a touch in Asia, with the major cash benchmarks running little changed to 1.5bp cheaper ahead of European hours. There has been a lack of tier 1 macro news flow, but e-minis managed to unwind their early, modest losses to print a touch higher on the day, while some spill over from the latest RBNZ decision was also observed. T-Notes last trade -0-04+ at 134-04, within the confines of a 0-06+ range. Flow in the space was headlined by a 10K block buyer of the TYU1 135.00 calls.

• To recap, the cash Tsy curve twist flattened around the 7- to 10-Year zone on Tuesday, with the major benchmarks finishing within ~1.0bp of Monday's closing levels. The space printed intraday richest levels during the European morning, with jitters evident on the back of the latest round of Chinese regulatory moves re: the tech sector and COVID worry/dovish price action in New Zealand. Tsys managed to cheapen on the back of softer than expected U.S. retail sales data, which despite missing median exp., wasn't as soft as BofA/JPM exp. (the forecasts from those two names carry weight with this release owing to their access to card spending data). Elsewhere, manufacturing & industrial production data beat. NY futures flow was headlined by an FV/WN block flattener (-15,217 FV vs. +2,184 WN), which added to similar flow witnessed on Monday.
• NY hours will see the release of the minutes from the FOMC's latest monetary policy decision, comments from St. Louis Fed President Bullard ('22 voter), building permits & housing starts data and 20-Year Tsy supply.