Light Twist Flattening Develops

Cash Tsys now twist flatten on the day, with e-minis back from lows and perhaps an incremental degree of optimism creeping in after post-Biden-Congressional leadership debt ceiling meeting rhetoric pointed to some limited positive developments. House Speaker McCarthy alluded to the potential for a deal by the end of the week, albeit with both sides still apparently far apart at present. President Biden has shortened his international trip surrounding the G7 meeting to deal with the matter and the staff level talks surrounding the issue have seen a bit of a rejig.

• Cash Tsys sit 1.5bp cheaper to 1.5bp richer, twist flattening, pivoting around 10s. TYM3 operates 0-01 off the base of the 0-06+ range establish pre-London.
• There hasn’t been much in the way of meaningful headline flow to digest, with he same holding true on the market flow side.
• FOMC-dated OIS continues to show a little over 60bp of cuts priced by the end of the year (vs. current terminal rate pricing).
• Looking ahead, debt ceiling rhetoric, 20-Year Tsy supply and lower tier data present the focal points of the U.S. docket.