Firmer Into Close, Curve Flattens

TYH3 deals at 113-20, +0-07, in line with levels seen late in the NY session.

• Cash Tsys finished 3-6bp richer across the major benchmarks on Wednesday, the curve flattened.
• Tsys were pressured in the NY morning as cross-market flow weighed, unwinding the pre-NY bid. Comments at an MNI event by ECB's Knot sparked weakness in ECGBs, he said a 50bp hike was possible in May. Further hawkish ECB speak weighed on the space.
• A slew of Fed speakers stressed the need to keep raising interest rates, highlighting the potential for a higher than forecast terminal rate. It was also noted that whilst a recent moderation in inflation was welcomed, they cautioned that it will take time for inflation to come back to target.
• Tsys then firmed to session highs, before paring gains, as the latest 10-Year auction stopped through by 2.9bps, indirect take-up surged to a new high and a strong bid/cover ratio was observed.
• A late bid in Tsys, after the post 10-Year auction pullback, was facilitated by a report noting that the G7 is mulling sanctions for Chinese firms aiding the Russian military may have also aided the bid at the margins, further aided by more attractive entry points after the pullback from the post-auction bid.
• In Asia-Pac today there is a thin docket. Further out national CPI from Germany and Initial Jobless Claims provide the highlight. We also have the latest 30-Year Tsy Supply.