A Little Cheaper On RBNZ

T-Notes traded a touch cheaper during Asia-Pac hours, although there was a lack of notable news flow outside of the hawkish surprise provided by the OCR track that accompanied the RBNZ monetary policy decision. T-Notes last -0-03+ at 132-27+, while cash Tsys saw some modest bear steepening as 20s provided the weak point on the curve, cheapening by ~2.0bp as of typing. T-Note volume hovers around 290K, although ~177K of that has come via the roll, with the latest estimates pointing to ~65% of the TY roll being completed at present. Overnight flow was headlined by a 5.0K block sale of the TYN1 132.50 calls.

• As a reminder, the cash Tsy curve bull flattened on Tuesday, with the long end richening by ~5.0bp on the day come the bell. Momentum from a firm 2-Year auction allowed the space to build on earlier gains, with a negative day for equities providing another leg of support, allowing T-Notes to firm into the bell. Equities gave up their early gains on the back of a downtick/miss in the monthly consumer confidence reading and soft new home sales data (although house price data was firmer than exp.). In terms of auction specifics, 2-Year Tsy supply stopped through WI by 0.7bp, with the cover ratio hitting multi month-highs as dealer takedown slid & end-user demand hit the highest level witnessed since late '19 (for 2-Year supply), as desks pointed to bill holders extending the maturity profile of their holdings as a supportive factor (a reminder that such talk was evident after the release of March's TIC flow data). Fedspeak was headlined by Vice Chair Clarida, who noted that "it may well be" that "in upcoming meetings, we'll be at the point where we can begin discuss scaling back the pace of asset purchases…I think it's going to depend on the flow of data that we get."
• Fedspeak from Quarles & 5-Year Tsy supply headline the local U.S. docket on Wednesday (2-Year FRN supply is also due).