Firmer On Tuesday

T-Notes little changed at the re-open, -0-02 at 132-12+.

• GOP Senator Capito's infrastructure talks with the Biden admin have ceased, with Biden set to pursue talks with a bipartisan group of Senators moving forwards.
• The broader Tsy space firmed on Tuesday, with benchmark yields across the curve richening by 0.5-3.5bp come the bell, as 10s outperformed. A peculiar, relatively widespread global website outage was the catalyst behind an early NY bid for the space, while equities struggled early on, before recovering. Tsys failed to challenge their early NY extremes, but didn't get anywhere near reversing gains. The more notable rounds of flow were also supportive for the broader Tsy space, with an apparent liquidation of an existing FV/WN steepener seen (-19K vs. +2,950), while short TY vol. structure plays and talk of broader short covering in the space were also observed. Elsewhere, the latest 3-Year Tsy auction stopped through WI by 0.1bp, with dealer takedown sliding to the lowest level witnessed in over 1 year as the cover ratio nudged above its recent average. For STIRs, downside plays in EDZ3 were witnessed (via the 2EZ1 99.125/99.00/98.875 put fly). A 40K screen seller of the EDU2/Z2 spread was also seen.
• Chinese inflation data headlines the Asia-Pac economic docket on Wednesday, while 10-Year Tsy supply dominates the domestic U.S. docket.