Curve Marginally Flatter, No Breakthrough In Debt Ceiling Talks

TYM3 deals at 113-20, +0-00+, in line with late NY levels.

• Cash tsys finished flat to 2bps richer across the major benchmarks on Tuesday, the curve was marginally flatter.
• After briefly extending losses as Minneapolis Fed President Kashkari noted that rates may need to be hiked again if inflation stays high, tsys firmed off session lows after Rep Graves (R-LA) told reporters that Republicans and the White House are still far apart despite upbeat statements after Monday's meeting.
• The space looked through the latest round of US data; flash May Services PMI beat estimates whilst Mfg PMI was softer than expected and in contractionary territory. New Home Sales beat estimates however the prior read was revised downwards.
• Tsys continued to firm after the latest 2 Year auction stopped through. A strong bid/cover ratio and indirect take up were observed.
• A late TU block (5k lots) also added a layer of support.
• The latest RBNZ monetary policy decision headlines in Asia today. Further out we have UK CPI and the minutes from the May FOMC meeting. Fedspeak from Gov Waller will cross. We also have the latest 5-Year supply.