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Free AccessA Little Firmer Overnight
T-Notes pared their modest late NY/early Asia losses, last unch. at 134-21+. Cash Tsys have seen some bull flattening with the shorter end of the curve little changed, while the longer end has firmed by 1.0-1.5bp. There hasn't been much in the way of news flow to drive the move, with a downtick in e-minis & high beta FX seemingly lending support. In terms of $ supply, Indonesia outlined a tap of their '51 & '71 $ bonds, and a new 10-Year $ bond. The taps and the 10-Year supply will all be of benchmark size, with the potential for pricing in today's NY session (per BBG sources). Broader volume is a little lighter today, with TYU1 volume under 100K at this time of day for the first time this week.
- To recap, the bid that was seen during European hours-early NY dealing on Tuesday (resulting in fresh multi-month lows for 5- to 30-Year yields) faded as we moved through the day, with the cash Tsy curve twist steepening as benchmarks out to 5-Years richened by ~2.0bp, while the longer end of the curve cheapened by ~5.5bp. The now familiar risk-off factors supported the space ahead of NY hours, with softer than expected building permits data also feeding in during early NY dealing. That was before the S&P 500 rallied from worst levels of the day to finish ~1.50% higher, unwinding Monday's losses. There was little in the way of outright drivers seen re: equities, with the Tsy space snapping back alongside the equity rally. Note that J.P.Morgan moved their end of 21 EPS & price target for the S&P 500 higher. The stronger USD likely fed into the strengthening of the domestic equity markets. Longer dated swaps ran wider on the day, feeding into the cheapening that kicked in during NY hours, with an uptick in $ corporate issuance eyed.
- 20-Year Tsy supply and fiscal matters on the Hill are set to dominate during NY hours on Wednesday.
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