Limited Asia Trade After Tuesday's Steepening

T-Notes held to a 0-03 range overnight, last dealing -0-00+ at 133-31, while cash Tsys trade at virtually unchanged levels across the curve. There was a lack of meaningful news headlines during Asia hours. Roll flow bolstered futures volumes, while the options space saw block buys of the USU1 169.50 (+2.0K) and USV1 166.00 (+2.5K) calls. We also saw a small screen buyer of the TYV1 132.00 puts.

• As a reminder, the cash Tsy curve steepened on Tuesday, with 2s little changed and the long end running ~4.5bp cheaper at the bell. A bid in equities kept the space under pressure, while a 10K block sale of FV futures (~$510K DV01) helped keep the pressure on in late NY dealing. Mixed local data failed to provide any real impulse. We also saw a ~7K buyer of the TYZ1 131.50/136.50 strangle, while the short-end was dominated by a 55K buyer of the EDU3/Z3 spread during the NY morning. Futures rolls supported broader futures volume, with "normal" volume relatively subdued once rolls were netted off. A solid round of 2-Year supply (stopped through by 1.1bp, with the cover ratio moving above the recent averages and dealer takedown sliding to multi-year lows) put a brief bid into the space, before the cheapening resumed. Still, the 2-Year auction helped underpin the steepening theme. Late NY hours saw the House pass the $3.5tn budget resolution along party lines, while the bipartisan infrastructure bill was advanced. There is a non-binding commitment to vote on the infrastructure bill by the end of 27 September.
• Looking ahead to NY hours, we will see prelim durable goods data and the latest round of 5-Year supply.