Light Richening Consolidates

E-minis moving back from best levels to sit little changed on the day and a second-round bid in Gilts allows Tsys to consolidate gains that were seen through the Asia-London handover, leaving the major cash Tsy benchmarks running 2-3bp richer across the curve, breaching Monday’s lows in yield terms. TYU3 is +0-07, 0-03 off best levels with the 6 Jul high (111-15) presenting the immediate technical resistance point of interest, capping the rally.

• A quick reminder that the light richening seen thus far was also aided by the Asia-Pac reaction to Monday’s price action and block buying flow in FV through UXY futures, after Monday’s activity saw longs added/shorts trimmed in the TU through US segment of the curve (per OI data), while WN futures saw a reduction in existing longs.
• An FT interview with NY Fed President Williams did little for markets. FOMC-dated OIS currently prices ~22bp of tightening later this month, a cumulative ~33bp of hikes through November followed by ~65bp of cuts through June ’24.
• NFIB small business optimism, Fedspeak and 3-Year Tsy supply provide the highlights of today’s NY docket.