A Touch Cheaper On Wednesday

A tight re-open for T-Notes, last -0-00+ at 132-05+, after going out just above worst levels of the day on Wednesday.

• The major cash Tsy benchmarks cheapened by 2.0-3.0bp across the curve on Wednesday. Setup ahead of 5-Year supply applied some pressure as we moved through NY trade, unwinding a bid that came in on the back of the softer than expected new home sales reading. 5+-Year swap spreads widened by ~1.0-1.5bp on the day, applying some extra pressure to the space.
• In terms of auction specifics, 5-Year supply generated a 0.2bp tail, as the cover ratio eased backed to average levels, while dealer participation ticked back up in line with its own recent average. A 6.0K FVU1 block sale was seen shortly after the auction, although there was a 6.5K block buy of the same contract later in the day. On the options side a 9,999 lot block seller of the FVQ1 123.50 calls was seen ahead of the auction.
• Fedspeak offered up little new, with Bostic, Kaplan & Rosengren reiterating their previously outlined stances.
• In terms of fiscal matters, Tsy Sec Yellen urged Congress to raise or suspend the debt ceiling before August,
• On the infrastructure front, Rep. Senator Romney & Dem. Senators Manchin & Tester have pointed to a deal being near, although several source reports questioned whether there would be a deal struck before the July recess.
• There is nothing in the way of tier 1 headline risk events slated for Asia-Pac hours, with the latest German IFO survey & BoE monetary policy decision headlining in Europe. Thursday's local docket sees the latest raft of Fedspeak (Williams, Bostic, Barkin, Harker, Bullard & Kaplan), the Fed stress test results, several data releases of note (headlined by the latest durable goods and weekly jobless claims data) and 7-Year Tsy supply.