Flat Start After Tuesday’s Bull Flattening

A flat start for T-Notes after the contract finished a little shy of its NY peak on Tuesday, last dealing -0-02+ at 133-17.

• Softer than expected CPI data fed the bid on Tuesday, with those in the transitory inflation camp displaying some more gusto, allowing the curve to bull flatten, although the lack of 5-Year outperformance over the session (despite an initial round of post-data outperformance) points to broader demand evident in the space. 2s finished 0.5bp richer, while 30s were the best part of 5.0bp firmer on the day come the bell. Option volumes proved muted, although vol. sellers emerged by the middle of the NY morning, while low delta buyers were seen in Oct FV & TY puts. $IG issuance continued at a healthy pace.
• The latest round of monthly Chinese economic activity data and the PBoC's MLF operation provide the highlights during Asia-Pac hours. NY trade will see the release of lower tier data, headlined by the Empire manufacturing and industrial production readings.