Block Sales Help To Keep Pressure On

TYZ2 hovers just above the base of its 0-13+ range into London hours, last -0-09+ at 110-23, on solid volume of ~120K, operating just above technical support at the contract’s cycle low (110-19). Cash Tsys run 3.5-11.5bp cheaper across the curve, with 10s leading the way lower as that benchmark hovers just below 4.00%, with the round number protecting the triple top resistance area drawn off the ’09, ’10 & YtD highs.

• Spill over from Monday’s cheapening was aided by several rounds of block sales in TY & FV futures, alongside a USD bid, with Tsys extending on yesterday’s weakness as cash trade opened after the elongated Columbus Day weekend.
• There wasn’t much in the way of meaningful headline flow to drive the move, with the space shrugging off the latest round of risk-negative COVID headlines out of China, after the state-backed People’s Daily reiterated the need for the country’s ZCS, while a fresh mass testing scheme was unveiled in the city of Shanghai.
• Looking ahead, Tuesday’s NY docket will see the release of the NFIB small business optimism index, Fedspeak from Mester and 3-Year Tsy supply.