Bear Steeper Ahead Of 5Y Supply, New Home Sales Data

Treasuries have cheapened over the course of the European morning session. Yields across the curve currently trade at or near intraday highs in a bear steepening move, with longer-end Treasuries retracing most of Tuesday's rally.

• TY futures sit 4 ticks above Tuesday's lows, at 106-06+ (5 ticks lower on the day). Latest cash levels: 2-Yr yield is up 0.5bp at 5.0811%, 5-Yr is up 2.5bps at 4.8457%, 10-Yr is up 4.7bps at 4.8697%, and 30-Yr is up 5.6bps at 4.994%.
• Overnight highlights included stronger-than-expected Australian inflation data and German IFO business sentiment, helping underpin global yields after Tuesday's poor ex-US PMI data.
• That said, looking cross-asset, it's hardly a risk-on session so far: equity futures have softened after some stability in early Asia trade, while the USD has advanced to its best levels in 2 sessions as the US extends its yield advantage.
• Wednesday's data/speaker docket is fairly light: MBA mortgage apps at 0700ET and new home sales at 1000ET are the highlights.
• While Chair Powell appears after market close (1635ET), it's unlikely to be a market mover as he's expected to respect the pre-FOMC blackout period.
• In supply, auctions for $52B 5Y Note, and to a lesser extent $26B 2Y FRN, are the highlights. The 5Y will be eyed as a bellwether on current Fed "higher-for-longer" sentiment, after a series of mixed Tsy auctions including Tuesday's on-the-screws sale for 2s.