Firmer On Tuesday

T-Notes tight at the re-open, with the contract just shy of late NY highs, last dealing unchanged at 132-31, with the previously highlighted round of TY roll selling observed.

• As a reminder, the cash Tsy curve bull flattened on Tuesday, with the long end richening by ~5.0bp on the day come the bell. Momentum from a firm 2-Year auction allowed the space to build on earlier gains, with a negative day for equities providing another leg of support. Equities gave up their early gains on the back of a downtick/miss in the monthly consumer confidence reading and soft new home sales data (although house price data was firmer than exp.). In terms of auction specifics, 2-Year Tsy supply stopped through WI by 0.7bp, with the cover ratio hitting multi month-highs as dealer takedown slid & end-user demand hit the highest level witnessed since late '19 (for 2-Year supply), as desks pointed to bill holders extending the maturity profile of their holdings as a supportive factor (a reminder that such talk was evident after the release of March's TIC flow data). Fedspeak was headlined by Vice Chair Clarida, who noted that "it may well be" that "in upcoming meetings, we'll be at the point where we can begin discuss scaling back the pace of asset purchases…I think it's going to depend on the flow of data that we get."
• The latest RBNZ monetary policy decision headlines the regional Asia-Pac docket, with broader liquidity set to be thinned by the Vesak Day holiday (Singapore is the largest regional financial centre to observe that particular holiday). Fedspeak from Quarles & 5-Year Tsy supply headline the local U.S. docket on Wednesday.