Bull Flattening Seen Tuesday, CPI In View

T-Notes flat at the re-open, last -0-03 at 131-24, after the contract moved away from best levels ahead of Tuesday's close. Note that Tuesday's rally fell short of a test of the recent contract highs that were printed on Friday

• The cash Tsy curve bull flattened, with 2s firming by ~2bp, while 30s richened by ~6.5bp come the close. This came after modest bull steepening during Asia-Pac hours, with the early bid linked to a BBG source report which suggested that Fed Governor Brainard was a "serious rival" for Fed Chair Powell in the race to sit atop the central bank. There was also a sense of international impetus evident, with the long end of the UK & German curves outperforming Tsys.
• The space was helped off best levels by the latest 10-Year Tsy auction, which tailed by a little over 1bp, with the cover ratio falling below the recent average, while end user demand remained elevated in a historical sense, even as dealer participation saw a minor uptick.
• Chinese inflation data provides the focal point during the Asia-Pac session. Looking ahead, U.S. CPI provides the main risk event during Wednesday's local session, with average earnings data also due. We will also get the latest round of 30-Year Tsy supply.