A Little Flatter In Asia, Aided By TY Block Buy

T-Notes stuck to a narrow 0-03+ range overnight, last dealing +0-01 at 132-25+. Cash Tsys trade unchanged to 1.5bp richer across the curve, with bull flattening in play as regional players reacted to Wednesday's bid and looked through any positives surrounding a phone call between the U.S. and Chinese ministers of commerce. Preliminary open interest data pointed to short covering in TU, TY, UXY & US futures on Wednesday, which was touted at the time. Finally, a 3,665 lot block buy of TYU1 futures helped the broader bid during Asia-Pac hours.

• As a reminder, the curve ran flatter on Wednesday, with 2s little changed and 10+-Year paper richening by ~4.5bp come the bell. Continued talk of short covering did the rounds as the space firmed in pre- and early NY trade, with 10s testing their recent richest levels, while 30s briefly had a look through multi-month riches before working away from extremes. The latest round of 10-Year Tsy supply then triggered a fresh, albeit more modest, round of richening, as the auction stopped through WI by 1.0bp, with dealer takedown tumbling to ~5-Year lows & cover ratio pushing further above the recent averages. NY flow was headlined by a 20K block buy of TYU1, 9.5K block buy of FVU1 & what seemed to be a mis-weighted TU/FV flattener (-7,485 vs. +7,392).
• Participants may be happy to sit on the sidelines ahead of risk events scheduled during Thursday's European & U.S. sessions (the ECB monetary policy decision, U.S. CPI print & 30-Year Tsy supply). Weekly jobless claims and real AHE data pad out the local economic docket.