Bear Steepening On Tuesday; Fedspeak Eyed

TYZ2 is -0-01 at 115-18 after the re-open for Tsy futures, operating 0-03+ above Tuesday’s base at writing, holding on to the bulk of the cheapening observed at that session.

• To recap, Tsys cheapened soon after the NY open on Tuesday as the U.S. returned from the long weekend, with a beat in the Aug ISM services survey (56.9 vs. BBG median 55.3) accelerating the move lower.
• Cash Tsys ran 11.5-16.0bp cheaper across the curve heading into the close, bear steepening.
• From a technical perspective, Tuesday’s move lower in TYZ2 has seen it trade through the bear trigger at 115-23 (Sep 1 low), exposing further support at 114-26 (Jun-26 low).
• Looking ahead, the economic data docket across the Asia-Pac session is relatively light, with Australian Q2 GDP and the BoJ’s Rinban operations (covering 1- to 10-Year JGBs) due.
• Further afield, U.S. trade balance data, weekly mortgage applications, and the Fed’s Beige Book will cross later in the NY session, with Fedspeak from the Fed’s Barkin (‘24 voter), Mester (voter), and Brainard (voter) in focus.