Bear Flattening

TYU2 operates around late NY levels at the re-open, just off its Tuesday base, dealing -0-02 at 117-29.

• The major cash Tsy benchmarks finished Tuesday 1-6bp cheaper, with the curve bear flattening. This came after a move higher in ECB rate hike premium weighed on wider core global FI markets during the London morning, with both RTRS & BBG sources pointing to the potential for a 50bp rate hike later this week (vs. well-established forward guidance for a 25bp step, which many suggest would leave the ECB behind the curve). A rally on Wall St., led by the NASDAQ, kept the pressure on Tsys during NY trade. Meanwhile, post-earnings issuance from U.S. financials continued.
• Also note that reports flagged that Russia would be resuming gas flows via the Nord Stream 1 pipeline on Thursday (in line with the previously outlined maintenance schedule) albeit at a reduced flow rate. More recent comments from Russian President Putin noted that Gazprom is ready to meet its contractual gas export agreements, while he pointed the finger at Ukraine when it comes to the closure of one of the gas transit routes to Europe. Furthermore, Putin warned that the volume of gas flows through the Nord Stream 1 pipeline could drop if the return of a turbine sent to Canada for repairs is delayed. Putin noted that another turbine needs to be sent for maintenance around July 26. He added that supply volume could be reduced to ~30mcm/day if the number of operating turbines is reduced to one from the current two.
• An address from RBA Governor Lowe and the latest Chinese LPR fixings (no change expected in the 1- & 5-Year fixings) headline the Asia-Pac docket. Further out, existing home sales data and MBA mortgage apps are due to cross on Wednesday, coming on the heels of softer than expected housing starts data and a building permits print that wasn’t quite as soft as expected, but was still negative in M/M terms. 20-Year Tsy supply is also due on Wednesday.