Bounce From Tech Support Extended On Wednesday

TYM2 operates a little shy of its late NY session peak, last +0-04 at 123-08+.

• To recap the curve bull flattened on Wednesday, with the major cash Tsy benchmarks going out 6-12bp richer on the session. This came after Asia-Pac hours saw TYM2 bounce off technical support, with firmer Gilts on UK fiscal dynamics providing some support during the London/NY crossover. Domestically, a firm round of 20-Year Tsy supply (stopping through WI by 1.4bp, as the cover moved higher, comfortably above the recent average, while dealer takedown cratered to the lowest share on record for 20-Year supply) and soft equity markets also fed into the bid. Meanwhile, Russia looked to force “unfriendly” natural gas customers to pay for their product in RUB, while the proximity to Thursday’s NATO summit and the spectre of impending fresh sanctions on Russia also fed into the bid (while also providing support for crude oil). Fedspeak had little meaningful impact on the space.
• Comments from St. Louis Fed President Bullard (’22 voter, hawk) headline the Asia-Pac docket, although he is unlikely to provide much in the way of fresh information for markets to digest. Looking ahead, NY hours will see the release of weekly jobless claims data, durable goods, 10-Year TIPS supply and Fedspeak from Waller, Kashkari (’23 voter), Evans (’23 voter) & Bostic (’24 voter).