Curve Flattens On Wednesday

TYM3 deals at 114-08, +0-02, in line with late NY levels.

• Cash tsys finished 5bps cheaper to flat across the major benchmarks, the curve bear flattened.
• Pressure from Gilts in lieu of UK inflation falling less than expected saw tsys pressured in the European session.
• A brisk pace of corporate issuance and pre-20 Year auction hedging capped the recovery and added fresh pressure in tsys, seeing TY re-test session lows.
• The latest 20-Year supply marginally tailed, an average bid/cover ratio was observed and indirect take up was a touch above previous months.
• Tsys pared losses after the Fed Beige Book survey crossed, the survey noted that there had been little change in economic activity over the last few weeks. Employment growth moderated and the pace of overall price increases slowed.
• In Asia-Pac today CPI data from New Zealand and Fedspeak from NY Fed President Williams headline. Further out we have Initial Jobless Claims and Existing Home Sales. There are also a number of Fed speakers, including Governor Waller and Cleveland Fed President Mester. We also have the latest 5 Year Supply.