Manic Monday

TYZ2 operates just above its late NY cycle low.

• Cash Tsys were 13-24bp cheaper come the bell on Monday, with intermediates leading the weakness. The 5-/30-Year curve hit fresh cycle lows, although the 2-/10-Year spread failed to do so, before steepening as intermediates drove the weakness.
• Weakness in Gilts provided an extension of the Asia-Pac session weakness, as the prospect of further fiscal loosening in the UK (and its impact on monetary policy) reverberated around global markets. Note that a BoE statement played down chances of an inter-meeting move.
• The lack of support resulted in the widest tail observed at a 2-Year Tsy auction since early ’20, fuelling further weakness.
• A sizable TY block buy (+25K) helped the space find a bit of a base during post-auction trade, before fresh cheapening became apparent into the bell.
• Regional reaction to Monday’s broader market moves will dominate in Asia-Pac hours, with little in the way of tier 1 risk events slated.
• Further out, Tuesday’s NY session will be headlined by durable goods and consumer confidence data, with various housing market metrics and the Richmond Fed m’fing survey also due. 5-Year Tsy supply will also cross in NY hours, while Fedspeak will come from Powell (on digital currencies), Bullard, Evans & Kashkari.