Asia Wakes Up To Flatter Curve

TYH2 a touch above late NY levels, -0-02+ at 126-21+

• Cash Tsys finished the session 2.5bp cheaper to 2.5bp richer on Wednesday, with the curve flattening, pivoting around 5s. 10s outperformed on the curve, aided by a strong auction, with the space richening into supply, before cheapening kicked in post-auction, with an uptick in equities and positioning squaring ahead of tomorrow’s CPI print flagged by desks.
• Note that several desks flagged the potential for the deployment of short cover in the 10-Year auction, which seemed to ring true. The auction stopped through by a little over 2bp, with the cover ratio pushing above the recent averages, while dealer takedown cratered into single digit territory (registering a record low for 10-Year supply).
• Fedspeak continued to lean against speculation of a 50bp rate hike at the end of the March FOMC, although the potential for a 50bp rate hike at some point (based on inflation data) hasn’t been completely ruled out.
• There isn’t much in the way of tier 1 risk slated for Asia-Pac hours, while CPI will headline Thursday’s NY docket. Elsewhere, weekly claims & real earnings data will cross. 30-Year Tsy supply is also due.