Firmer On Tuesday, Midterms On Deck

TYZ2 deals just below its late NY peak, last -0-00+ at 110-08+.

• Tsys ultimately firmed on Tuesday, with the major cash benchmarks richening by 5-10bp as 7s outperformed and 30s lagged.
• Well-received 3-Year Tsy supply helped the space to firm, with a downtick in Fed rate hike premium also supporting the bid.
• Digestion of headlines surrounding German debt issuance created some early NY vol., pulling the space away from pre-NY highs, before the early rally extended as we moved through NY dealing.
• In terms of outright drivers, there wasn’t much to go off, with ECB rate hike premium also receding a touch on the day, aiding the bid in wider core global FI.
• 3-Year Tsy supply stopped through WI by a little over 1bp, with dealer takedown falling back below its recent average as the cover ratio held steady, just above its own recent average.
• Midterm election results will filter out through the evening (although we may not get a conclusive result tonight, particularly if the Senate race is close), with the GOP expected to retake the House, and perhaps the Senate. Meanwhile, Chinese inflation data headlines the Asia-Pac economic docket.
• Further out, Wednesday will bring 10-Year Tsy supply, as well as Fedspeak from Williams & Barkin.