Flat Into Europe

TYZ1 showed through Tuesday's low during Asia-Pac hours, before recovering from worst levels, to last print unch. at 130-05+, with the cash Tsy space running little changed across the curve at typing. An uptick in the USD helped to apply modest pressure during the move lower. Macro headline flow was light overnight, with ACGB gyrations shaping early two-way price action. Wednesday's NY docket will see the release of housing starts and building permits data, 20-Year Tsy supply and Fedspeak from Williams, Bowman, Waller, Mester, Daly, Evans & Bostic.

• To recap, Tsys cheapened on Tuesday, with the shorter end of the curve little changed, while the long end was ~3.5bp cheaper come the close, resulting in some bear steepening (the 5-/30-Year yield spread now sits a little over 10bp above the YtD flats registered at the backend of last week). Hawkish comments on the taper front from '22 Fed voter Bullard, in addition to firmer than expected retail sales data, pressured the Tsy complex in early NY hours. The space then recovered a little, before drifting cheaper again. A UXY block seller (-5,466) helped add fresh pressure late in the day.
• Wednesday's NY docket will see the release of housing starts and building permits data, 20-Year Tsy supply and Fedspeak from Williams, Bowman, Waller, Mester, Daly, Evans & Bostic.