Asia Assesses The Cheapening

TYZ1 steady at the reopen, +0-01+ at 130-25, after finishing a touch above late NY lows on Wednesday. Veterans Day holiday means that cash Tsys will be closed on Thursday.

• To recap, the belly led the notable weakness witnessed across the curve on Wednesday, with 5s cheapening by 13.5bp come the close, while 2s and 30s finished ~9bp cheaper on the day. Firmer CPI data was the initial catalyst for the belly-driven weakness (on Fed-repricing), while a huge tail on the latest round of 30-Year Tsy supply provided a further source of weakness later in the day. On the curve, the 5-/30-Year yield spread hit the flattest levels witnessed since the COVID-inspired vol. in Mar '20, while the 2-/5-/10-Year butterfly hit the widest levels seen since '15.
• In terms of auction specifics, 30-Year supply saw a tail of over 5.0bp, while the cover ratio slid below its recent average as dealer takedown hit the highest level seen at a 30-Year auction since '20.
• We should also flag that late Wednesday saw reports of Evergrande paying the missed coupon payments on 3 $-denominated bonds before the 30-day grace period elapsed.
• The monthly Australian labour market report headlines the Asia-Pac docket on Thursday.