Curve Flattens On Tuesday, CPI In View

TYM3 deals at 115-14, +0-02, in line with late NY levels.

• Cash tsys finished 2bps cheaper to 1bp richer on Tuesday. The curve twist flattened pivoting on 20s.
• Tsys were pressured in the European session; weakness in EGBs spilled over into the wider space as ECB terminal rate expectations increased.
• IMF rhetoric regarding central banks inability to return inflation to target until 2025 also weighed on the space.
• Tsys gradually firmed off session lows after the latest 3-Year auction was on the screws, an average bid/cover ratio was observed.
• Losses continued to be pared into the close as pre CPI position squaring came to the fore.
• Fedspeak from Philadelphia Fed President Harker crossed a moment ago, noting he is watching data to see of more action is needed on inflation. Chicago Fed President Goolsbee counseled prudence and patience on monetary policy.
• There is a thin calendar in Asia-Pac today. Further out CPI, FOMC meeting minutes and the Bank of Canada monetary policy decision provide today's highlights. We also have the latest 10-Year Supply.