Bear Flattening On Monday After Two-Way End To Day

TYZ2 deals around late NY levels, last +0-04+ at 110-23+.

• Cash Tsys finished Monday’s session 1-7bp cheaper, with the curve bear flattening.
• Late NY trade was subjected to some notable swings, with an uptick in yields after the Treasury lifted its estimate of privately-held net marketable borrowing for Q4. This triggered some block sales in both TY and WN futures, resulting in fresh session cheaps across the curve. This was before a late round of demand occurred, potentially linked to month-end extensions/rebalancing.
• Higher wheat prices linked to the indefinite Russian pullback from the Ukrainian grain deal, the weekend WSJ Fed whisperer piece pointing the potential for higher for longer rates (echoing the Fed’s own mantra) and firmer than expected CPI data out of Europe had provided some downward impetus for the space into NY hours.
• $IG corporate issuance also aided the cheapening.
• The latest RBA decision provides the headline risk event of the Asia-Pac session, with Chinese Caixin manufacturing PMI data also set to provide some interest. Further out, NY hours will see the release of the ISM manufacturing survey and JOLTs job opening data, although participants are of course more focused on Wednesday’s FOMC decision.