Little Changed Overnight

Tsys looked through an FT report which noted that U.S. President "Biden suggested he hold a face-to-face summit with Chinese president Xi Jinping during a 90-minute call last week but failed to secure an agreement from his counterpart, leading some US officials to conclude that Beijing is continuing to play hardball with Washington." Meanwhile, softer than expected Chinese economic activity data provided a very modest bid which didn't last. That left T-Notes within the confines of a narrow 0-03 range overnight, last -0-01+ at 133-18, while cash Tsys are virtually unchanged across the curve. An FV/WN block flattener (-9,409 FV vs. +1,362 WN) headlined on the flow side in Asia.

• To recap, T-Notes finished a little shy of their NY peak on Tuesday. 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.
• NY trade will see the release of lower tier data, headlined by the Empire manufacturing and industrial production readings.