Curve Twist Flattens

Cash Tsys sit ~1bp cheaper to ~1bp richer across the curve into London hours, twist flattening, pivoting around 5s. Tsys ticked away from session cheaps after a lack of follow through on the initial move higher in yields at the cash re-open (which was driven by Asia-Pac reaction to Friday’s news flow and bear flattening), with ranges remaining contained. Note that none of the major cash Tsy benchmarks managed to better their respective Friday yield peaks during the early move. TYM3 is +0-02 at 114-29+, just off the peak of a narrow 0-05 range. Volume in the contract runs at a mundane ~57K.

• Weekend headline flow was dominated by familiar ECB speak and sources of geopolitical tension, in addition to Tsy Secretary Yellen pointing to the potential for less Fed tightening owing to credit conditions. Asia-Pac news flow was particularly light.
• In the background we also flag the latest WSJ survey, which noted that "the economy is proving more resilient and inflation more stubborn than economists expected a few months ago, and as a result the Federal Reserve will keep interest rates high for longer.”
• Empire Manufacturing & NAHB housing market readings will be seen in the NY session. We will also hear from BoE’s Cunliffe & ECB’s Lagarde. Charles Schwab probably presents the highlight of the day’s corporate earnings releases (see our earnings release schedule here).