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Mild Bull Steepening - Housing Data and 20Y Supply Ahead

US TSYS
  • Cash Tsys have pushed through ranges established in Asia-Pac hours, looking beyond the BoJ decision as European FI and in particular Gilts rally.
  • The curve bull steepens, with yields between 0.5-2bps lower on the day. 2s10s at -39.5bps remains at the high end of last week's range.
  • TYM4 at 110-00 (+ 06) has lifted a little further off yesterday’s low of 109-24+ which pierced the bear trigger at 109-25+ (Feb 23 low). A clear break here could initially open 109-14+ (Nov 28 low).
  • Volumes are back at a more typical 310k for this time of day after Monday’s slow start, although are relatively light considering BoJ and RBA decisions overnight.
  • Another light session today, centered around housing data before the 20Y re-open, all with tomorrow’s FOMC decision in back-of-mind.
  • Data: Building permits/housing starts Feb (0830ET), TIC Flows Jan (1600ET)
  • Note/bond issuance: US Tsy to sell $13B 20-Y reopen (1300ET)
  • Bills issuance: US Tsy to sell $46B 52-W bills, $75B 42-D CMB (1130ET)

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