Curve Bear Flattens, Bank Risk Moderates

TYM3 deals at 114-18+, -0-02, in line with late NY levels.

• Cash tsys finished 1-13bps cheaper across the major benchmarks on Tuesday. The curve bear flattened.
• Tsys were moderately pressured on Tuesday amid no further evidence of stress within the banking system. The 18 pip daily range in the 2 Year Yield was the narrowest since 8 March.
• US Consumer Confidence unexpectedly rose in March, the survey was conducted a week after the collapse of SVB suggesting the latest financial turmoil is having little impact on the consumer.
• Fedspeak from St Louis Fed President Bullard noted that macroprudential policy can contain financial stress whilst appropriate monetary policy can put downward pressure on inflation. VC Barr told Congress the Fed is monitoring risks that higher interest rates pose to the balance sheets of banks after the collapse of SVB.
• The latest 5 Year auction stopped through, facilitating a recovery off session lows. Firm indirect take up and bid/cover ratio were observed.
• In Asia-Pac today CPI from Australia provides the highlight. Further out Pending Home Sales provides the main point of interest in an otherwise thin data calendar. Fed VC Barr appears before the House Financial Services Committee. We also have the latest 7 Year supply.