Curve Twist Flattens On Tuesday

A muted re-open for T-Notes, which deal -0-01 at 134-07+.

• To recap, the cash Tsy curve twist flattened around the 7- to 10-Year zone on Tuesday, with the major benchmarks finishing within ~1.0bp of Monday's closing levels.
• The space printed intraday richest levels during the European morning, with jitters evident on the back of the latest round of Chinese regulatory moves re: the tech sector and COVID worry/dovish price action in New Zealand.
• Tsys managed to cheapen on the back of softer than expected U.S. retail sales data, which despite missing median exp., wasn't as soft as BofA/JPM exp. (the forecasts from those two names carry weight with this release owing to their access to card spending data). Elsewhere, manufacturing & industrial production data beat.
• Fedspeak from Chair Powell was largely ignored by the market (he played down any expectations that there will be a simple, generic return to a pre-COVID economy), while Minneapolis Fed President Kashkari (Dove, '23 voter) noted that it is clear the U.S. economy is building up the substantial progress that will be needed before the Fed pares back asset purchases, and said such a move could be coming around the end of this year.
• NY futures flow was headlined by an FV/WN block flattener (-15,217 FV vs. +2,184 WN), which added to similar flow witnessed on Monday.
• The latest RBNZ monetary policy decision will headline during today's Asia-Pac session. NY hours will see the release of the minutes from the FOMC's latest monetary policy decision, comments from St. Louis Fed President Bullard ('22 voter), building permits & housing starts data and 20-Year Tsy supply.