Cheaper On Tuesday, US Bank Sector Concerns Moderate

TYM3 deals at 113-18, -0-09+, in line with late NY levels.

• Cash tsys finished 9-27bps cheaper across the major benchmarks, the curve bear flattened.
• 2 Year Tsy Yield continued to lead the swings yesterday, having moved ~115bps from peak to trough from Wednesday to Monday, losses were moderately pared yesterday as concerns abated about the US banking sector. KBW Bank Index finished the day with a 3.2% gain.
• Tsys were volatile in the wake of the Feb CPI print, the headline print was in line with expectations however the core measure was a touch firmer than expected printing its highest level since September.
• A brief rally related to the reports of a Russian jet contacting a US unmanned drone, details here, was unwound as two consecutive block sales (total 11.5k) in FV weighed on the space.
• Fed dated OIS shows ~17bps hike priced into next week's FOMC meeting. The Terminal rate is seen at ~4.95% in May with ~70bps of cuts priced in for 2023.
• Fed Governor Bowman noted a short time ago that the US Banking system is resilient and on solid footing.
• Data from China, including retail sales, industrial production and surveyed jobless rate provides the highlight in Asia-Pac. Further out we have Business Inventories, Retail Sales, PPI and Empire Manufacturing.